The buy-to-let market has seen renewed interest recently as more and more people decide to take the plunge and become a landlord.
The returns to be made can be lucrative in many areas of the country, especially when compared with relatively poor rates on savings.
New pension freedoms which came into force in April, giving people aged over 55 more flexibility over how they use their pension pot, may also prompt further interest.
According to a recent report from the Council of Mortgage Lenders (CML), buy-to-let lending for house purchase has performed more strongly than home owner loans for much of the year.
London, Birmingham, Bristol, Manchester, Leeds, Glasgow, Edinburgh and Plymouth have all been particular buy-to-let hotspots for landlords in recent months, according to recent research by Barclays Mortgages.
If you’re thinking of investing in the sector, it may also be worth bearing in mind that in the last Budget, it was announced landlords will see their tax breaks restricted.
Wealthier landlords receive tax relief at 40% and 45% - but this tax relief will be restricted to 20% by April 2020.
From April 2016, a “wear and tear allowance”, which allows landlords to reduce the tax they pay, regardless of whether they replace furnishings in their property, will also be replaced by a new system that only allows them to get tax relief when they replace furnishings.
HOW TO TURN YOUR PROPERTY INTO A CANNY INVESTMENT (according to Barclays Mortgages)
:: Visit your prospective property at least three times before making an offer. Make notes each time as you’ll pick up things you missed on the first viewing.
:: Get an objective opinion - whether it’s a friend, relative or partner.
:: Find a tenant who’s right for you. This process is a two-way street, it’s important to offer your home at a price that will appeal to a long-term tenant, if that’s what you are looking for.
:: Managing a property yourself can help reduce costs, but it’s important to use local knowledge and take independent advice if you go down this route.
:: Create a detailed inventory to help monitor costs. It’s a good idea to cover minor flaws in your property so tenants know what they can and can’t ask to be repaired. Be as straightforward as possible with tenants. Personal touches like a hand-written welcome note, a bottle of wine and flowers will help to reassure tenants they have a welcoming and approachable landlord.
:: Location matters. Make sure the area you’re interested in has a demand for rented property. It might be worth considering university towns and areas on planned key transport routes. Speak to local letting agents about average rents and the amenities and features that will attract your target tenant.
:: Get covered. Some policies cover additional risks associated with letting, such as emergency repair assistance, landlord’s liability and rental guarantee. Make sure your tenants understand their responsibilities - such as insuring their own possessions.
:: Budget wisely. When you’ve found the right property, work through the figures to make sure the project looks profitable. In addition to any mortgage repayments, factor in costs like solicitors’ fees, stamp duty, letting agency fees, furniture, service charges and ground rent if the property is leasehold, together with ongoing maintenance and repairs. Plan for potential interest rate rises, and periods when the property may be empty.
Financial fact: The transaction limit on contactless cards will increase to £30 from September 1 - the third increase since contactless cards were introduced in the UK.
PINGIT USERS CAN PAY FOR PARKING
People will be able to use the Barclays Pingit mobile payment service to pay for parking, under a new agreement.
Barclays has announced that Parkonomy, a new way to find parking online, will be offering Pingit as a payment method for its service.
Pingit, which has more than 2.7 million registered users, allows people to send and receive money using mobile phone numbers, without needing to exchange bank details.
COST OF A BURIAL PLOT VARIES WIDELY ACROSS UK
The average burial plot costs nearly £2,000 - but the price can vary by more than £1,000 across the country - according to new research.
The typical cost of a burial plot in the UK was found to be £1,841.
Nick Kennett, director of financial services at Post Office Money, who carried out the research, says: “The cost of burial sites is likely to continue to rise as time goes on, and the cost of land itself increases.”
GAP BETWEEN HAVES AND HAVE-NOTS HIGHLIGHTED
The typical family’s monthly income after tax reached a three-year high of £2,126 in May, marking the highest figure recorded since March 2012, according to Aviva’s latest Family Finance Report.
But the report said that across Britain “the upward trend masks a widening gap between the ‘haves’ and the ‘have-nots’”.
HIGH FIVE SAVERS
:: Phone/Website Rate Account Period Deposit Interest Paid
AgriBank www.agribankplc.com 3.30%(F) FixedRate 5YrBnd(W) £10,000 Yly
Secure Trust Bank www.securetrustbank.co.uk 3.11%(F) FixedRate 31.7.22(B) £1,000 Yly
FirstSave www.firstsave.co.uk 3.10%(F) FixedRate 7YrBnd(W) £1,000 Yly
Secure Trust Bank www.securetrustbank.co.uk 3.08%(F) FixedRate 31.7.20(B) £1,000 Yly
Al Rayan Bank 0845 6060 786 2.02% CashIsa 120Day £250 Mly
TOP FIVE MORTGAGE RATES
:: Phone No Rate Period Max% Adv Fee Incentive
Norwich&P’Boro BS 0345 300 2522 1.54%F for 2 years 65% £345 Yes
Yorkshire Bank 0800 202122 2.49%F to 31.10.17 90% £999 Yes
Norwich&P’Boro BS 0345 300 2522 2.18%F for 5 years 65% £1,295 Yes
HSBC 0808 256 6876 3.39%F to 31.10.20 90% £1,499 Yes
Norwich& P’Boro BS 0345 300 2522 4.34%F for 2 years 95% - Yes
* - Introductory rate for a limited period F - Fixed H - Operated by internet or telephone K - Operated by internet, telephone or post B - Operated by post or telephone W - Operated by internet P - Operated by post D - Discounted rate V - Variable rate X - Available to 65 and over.