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

  • Mathew Chan

    I worked with Jessica from Colliers Wood office on my first time renting in London (and this country) and she been amazingly helpful. We suspect we are the more demanding kind of renters who needs to know everything about the property in details, Jessica has been patient and responsive throughout the entire process. We are very thankful to have Jessica's help, without which our moving into the country might not be as smooth.

    Samuel Estates's listings are all high quality ones and they offer complimentary move-in service. Highly recommended.

  • Sam Thomas

    After nearly 4 years of renting a property through Samuel Estates we can now reflect about our experience with them as a Letting Agent.

    Throughout our tenancy, all issues were responded to efficiently and effectively as well as being resolved in the end despite any hurdles along the way. The team on the whole are very proactive in their replies and were very helpful throughout our 4 years!

  • abinash patnaik

    We rented through Samuel Estates in Colliers Wood and dealt with Yohana Gabanes as our Property Manager who was amazing. She was always quick to respond to things and helped deal with any issues that arose during our tenancy. Our checkout was smooth and hassle free. We are so happy to have her again as our property manager for our current tenancy 🙂

  • Benjamin Ofereh-Mugbeh

    Had a very good experience and I believe that was only possible thanks to the professionalism and amazing care Jessica put into helping us. We can not thank her enough. I highly recommend asking for Jessica. THANK YOU 😊

  • Doctor OReilly

    Great experience with Samuel Estates so far, and especially Stefano. Very responsive to my emails and always helpful. Thank you for making my rental move a smooth transition!

  • Antonio Dabraio

    Great experience with Samuel Estates, Jessica has been able to help us with finding our new flat for renting and the process has been very smooth, and always helpful.

    Definitely recommending Samuel Estates !

  • Kyran Farrell

    We are very grateful for the inordinate amount of help we had during a sale we had to make for a departed relative. Unexpected problems were handled calmy and speedily for us and communication was good and effective at keeping the process moving against the odds at times. Definitely an agency to recommend.

  • K F

    We are very grateful for the inordinate amount of help we had during a sale we had to make for a departed relative. Unexpected problems were handled calmy and speedily for us and communication was good and effective at keeping the process moving against the odds at times. Definitely an agency to recommend.

  • casa bianka

    I was renting flat for 2 years with Samuel Estates and level of support and professionalism which they offer is incredible! They're very nice, polite and working fast with your request, very good in problem solving. My first contact was based in Merton Mills and gentleman who was dealing with our flat was Chi, if you ever would like to rent flat in this area ask for him! I highly recommend this estate agency 🙂

  • Emily Pye

    We were looking to rent a new property and Stefano found us the perfect place despite our long list of required features! He was quick to reply and deal with all of our queries along the way. Highly recommend! Thank you Stefano.

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