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Revealing the secrets of buy-to-let success
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| Analysts are warning landlords not to sell off their properties |
SOME landlords may feel it is time to hand back the keys to the bank in the midst of the credit crunch. ASHTON BURKINSHAW reveals the secrets of making buy-to-let pay.
The current climate in the property
market has meant smaller private
investors and wannabe private investors, who had been attracted to the lower end of the market on a highly geared basis, are now
experiencing difficulty making returns match their mortgage repayments.
Many experts agree the market is in for a difficult ride, but there is disagreement as to whether buy-to-let will drag the rest of the market down, which the doom merchants are predicting.
However many analysts argue most investors will hang on to their portfolios.
They point out even if prices fall by six per cent over the next 18 months, investors who bought in 2002 would still be sitting on a gain of 50 per cent.
Other optimists point out the withdrawal of mortgages over 75 per cent for first-time buyers means aspiring homeowners will be forced to rent.
It can't be denied current falling property values are causing headaches for investors who were in it for a quick return and the temptation for landlords to cut their losses and sell is strong.
Rather than panic Ashton Burkinshaw
recommends it is a good time to check your
buy-to-let portfolio to see whether you are making the most of it.
There is potentially huge benefit in staying put and making your existing portfolio work harder and the specialist letting and property
management agent has some suggestions to make buy-to-let pay.
Are you charging market rent?
Demand for rented properties is on the increase with average rents across the country at their highest for a decade. Landlords may be able to
increase the rent, especially if the property has been redecorated or improved.
Claim all your tax allowances
Make sure you're claiming tax relief against rental income for most of your running expenses, including repairs, agents' fees and utility bills, as well as a general allowance of 10 per cent of rental income for wear and tear.
Shop around for the best mortgage
Decide whether it would be best to have one with percentage fees or high fixed rates. Depending on the size of your mortgage it might be worth paying a seemingly high fee than one which is calculated as a percentage of the loan.
Look out for a bargain
Falling property prices in some areas have
resulted in lower than market values,
particularly on repossessed properties, meaning there are good buying opportunities around.
Get rid of underperforming assets
Be ruthless and sell any property which is not performing well and has struggled for months.
Use a reputable letting agency
A key component of any landlord keeping their financial head above water is to hire a good
letting agency who is a member of The Association of Residential Letting Agents. A reputable agent is essential for checking prospective
tenant's references and ensuring the property is compliant with the latest legislation.
For more information on letting your property, visit aboutletting.co.uk
10:38am Wednesday 7th May 2008
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