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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

  • Charmaine Cheung

    Rented a place in London through Samuel Estates even when I was still living abroad, thanks to the fantastic Bilal Jamil who was so helpful throughout the whole process, helping arrange the virtual viewing and following up promptly right through to the move in date. Thank you so much Bilal!

  • Kia Wing

    The process right from searching to signing the contract has been smooth and easily laid out. Stefano has been amazing from the beginning of the process. He's been very responsive and understanding of what we needed, going the extra mile to secure us the perfect property. We would 100% recommend Stefano and Samuel Estates to anyone looking for their next property.

  • Natalia Sanchez

    We found a new place to rent through Samuel Estates and our experience so far has been quite positive. Bilal, who has been our main contact responsible for the "onboarding process", signing contracts etc.. has been very helpful and responsive solving all our questions promptly and keeping us updated during the whole time.

  • Lasse Berglund

    Bilal and Aleyna were both extremely helpful during our latest search for a flat.

    Booking viewings via email was painless, and the whole offer and referencing process was very smooth.

  • Brian Sharland

    Dealing with Samuel's Estate Agents has been a real pleasure. Their staff are friendly, courteous and efficient. All our queries were taken seriously and answered usually on the spot. The paperwork was sorted out quickly and the few issues after we had moved in were handled quickly too. Their aftercare is as good as their service.

  • Damir Lipa

    Brilliant service from Lina, my property manager at Samuel Estate in Streatham. Always available, positive attitude, prompt response and follow up to all requests, proactive and professional. Highly recommended!

  • isabela maciel

    Very happy with the services provided. From the lady who picked up the phone and managed to squeeze me into a viewing for 15 minutes after the call, to Stefano who showed the property and assisted me through the offering process with his excellent expertise. Also happy with the post signing service so far, including support for setting up and transferring bills.

  • Ava Chiu

    The whole renting process was very smooth. Agent Stefano is professional and responsive to our queries by providing detailed info every time. We love the property and area but it is a shame that the property is full of heavy cigarette smell in the upholstery which is deep inside and hard to get rid of the smell e.g. leather sofa. The whole experience will be even better if the smell has been removed by professional cleaning before we moved in. Unfortunately, Samuel Estate could not help much on this after we reported. Apart from this, the experience was good and staff are helpful! That's why it's 4 stars. Otherwise, we will give 5 definitely.

  • Christian Larsson

    I have been a happy client for many years and I continue to use Samuel Estates for my property management. Professional, transparent and service minded.

  • Ross Campbell

    My partner and I are a week away from moving in! The staff at Samuel Estates have been very helpful and quick to respond to any quieres throughout the process. Having engaged with almost all agencies within the area by far have found these to have the best properties and the best staff!

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