Unless you have impressive psychic abilities, it’s impossible to predict the future down to a tee. Despite this, it’s important to look at what could be in store for the property market in order to protect your buy-to-let property investments.
Predicting the future of buy-to-let can be a challenge, but fortunately, Abacus Solicitors are here to help. They’ve created the infographic below to help you see how the buy to let property market could fare in the future.
Making the Most of Your Buy to Let Investments
To expand on some of the key points in the infographic, we’ve provided more information on how to get started in the buy to let property development and make the most of your buy to let investments:
1. Consider Incorporation
If you’re considering venturing into the buy to let property market, it might be worth setting up as a limited company rather than operating as a private landlord.
If you’re a private landlord, you will need to pay income tax on your profits. Whereas, if you set up a limited company, you will need to pay corporation tax on your profits, currently set at 19%, which is lower than the current rate of income tax. You will also be able to claim a higher rate of relief on your mortgage interest payments than you would if you were a private landlord.
Operating as a limited company means that you pay less tax, and therefore you can hold on to more of your profits. However, it’s important to factor in costs such as administration fees and dividends tax, before deciding whether it’s best to make the move to a limited company.
2. Look to the North
If you’re looking for new investment opportunities, looking to the north of the UK could be the key to help you maximise the returns on your investment.
Whilst London and other southern cities were once the hotspots for buy to let, the north is beginning to surpass these areas as rental yields increase.
If you’re looking for more location guidance, the buy to let rental yields map from Totally Money gives a rough idea of the areas of the UK that are profitable for buy to let investments.
3. Invest in Commuter Belts
A commuter belt is an area around a city where a large number of people travel from to get to work every day.
For those working in a busy city, living outside the city is becoming a more attractive option, making it a sound investment opportunity for buy to let proprietors.
4. Rethink HMOs
Properties such as halls, student housing, shared flats and shared houses are also referred to as HMOs (houses in multiple occupation).
These investments are often overlooked by landlords as they can pose significant risks, however, they also provide excellent returns. For example, luxury student halls of residence can cost up to £650 per week for a room in some cases. Therefore, this is an avenue you definitely should consider if you want to make the maximise your return on investment.