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

  • Emma Hart

    After having horrible experiences renting at university, we're grateful for the attentive support we've had in finalising our tenancy. Daniel has been incredibly helpful, professional and taken the stress out of the process. We're excited to move into our new home and confident that any future problems will be managed well!

  • Ilda Prifti

    Great agency, we've been with them around 4 years. Always responsive and helpful.

  • Aimee Carpenter

    A great big thank you to Jessica at Samuel Estates Colliers Wood for all her help. She was so responsive and helpful through the process of renting a property and made it very stress free.

  • Sarah L

    A huge thank you to Yohana and the rest of the team at Samuel Estates Colliers Wood. We lived in a property managed by them for 4 years, and the service was always easy, efficient, and polite. Would definitely rent through Samuel Estates again!

  • Neal Helly

    My girlfriend and I experienced amazing service from Bilal and the team throughout our moving in experience. Bilal was very professional throughout and put us at ease from minute one, making the process very easy. Highly recommend!

  • chris graham

    Over the last few weeks I have dealt with Ryan and Daniel from the lettings team who were fantastic from the get go.Polite, professional, stayed in touch with regular updates.

  • chris graham

    Over the last few weeks I have dealt with Ryan and Daniel from the lettings team who were fantastic from the get go.

    Polite, professional, stayed in touch with regular updates.

  • Novak Bojovic

    I am a foreigner who was looking for a place in London for my university studies. The service by my agent Bilal was brilliant and most importantly very professional. The whole process was fast and the response on every question was quick and clear. One of the best attributes was the constant availability to solve any problems one might have.

  • Rainne Anne Wilson

    Our agent Bilal was very helpful! He responds very promptly to all our queries. We are very pleased with his service. Thank you very much, Bilal.

  • Alessandro De Corso

    Our agent Stefano was so professional and great since the day of the viewing through all the process of the tenancy agreement. Everything was set up on time and by law without any weird things that sometimes happen with many agencies around London. High recommend and big thanks again to our agent for his kindness and availability to met our requirements.

    Alessandro

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