Have you been considering investing in a buy to let property to start  expanding your property portfolio?

We’ve put together some of the key  aspects you need to know about if you are considering purchasing a property investment.

Buy as an Individual or in a Limited Company

If you’re considering building wealth over the next 5 – 10 years, you may want to consider setting up a Limited Company for a number of reasons. One big reason is, minimising your tax bill, especially if you are a high income earner on £100k and over. Paying 40% + tax on ALL income earned may end up stalling your growth plans. If you have a  property that is generating income and building cashflow month on month, it sits in the company and you re-invest in future. As long as you don’t draw on it as income, you can buy your next property in a short space of time. Keep in mind though that limited companies that make a profit pay corporation tax at 19%.

If you have any questions with regards to setting up a Limited Company or finding out more, we would be delighted to refer you to our tax specialist to assist. Call direct on + 44 (0) 207 993 4081 or simply send an email for a fast response.

Location, Location, Location

When it comes to choosing where to buy your property, it is very important to pick the right location. The Stonelink International philosophy is; “Pick the worse property, in the best street, in the ideal location.”

We recommend choosing an area that is popular with plans to grow from future regeneration projects that will add value to the location, an area that is well connected for commuters or an area that is considered a property hot spot.

If you were to choose an area where people don’t necessarily want to live, your investment could end up costing you money due to void periods where the property is left untenanted.

If you were to choose a new build, you may want to factor in the premium the developer will charge on the sale price, along with the high services charges and ground rent and what key factors the Head Lease includes if the purchase is a leasehold.

Depending on the type of tenant you’re targeting you may want to consider things like local parks, shopping districts, restaurants and nightlife, as well as reputable schools. Choosing the right amenities, in highly sought after areas will make for consistent rental income and a great return on your investment.

Finances

Before committing to a long term property investment, you need to work out the finances. As well as the initial downpayment and cost of the property itself, you’ll also need to factor in additional costs like repairs and taxes, which include, stamp duty land tax, which is paid on buy to let investments.

If you’ve managed to purchase a property and are in the process to complete before the end of March, you will benefit from the stamp duty holiday and be able to save a considerable amount on your property investment.

You will also have to pay tax on the rental income you earn, and capital gains tax that is payable on any profit you make when you sell the property in the future.

EWS1 Form – Make Sure You Buy a Compliant Property

If your considering buying an apartment in a high density building, make sure the building is compliant and you have a signed off EWS1 form. Since the tragedy at Grenfell Tower in London, it has been found that there are multiple buildings across the UK with flammable cladding. The Evening Standard on the 29 January 2021 stated;  The Government does not know how many buildings are affected but it is feared that nationally two to three million people are caught up in the cladding crisis, suggesting a London total of up to 500,000.

Property Management

Property investors who have a lot of time and for whom building a property portfolio might be a full-time job may not need to hire a property management company as they will have the time to manage the properties themselves.

However, if you are short of time and don’t want the added stress of finding tenants, completing documentation and covering any maintenance issues, we recommend hiring a reputable property management company to do it for you.

If you have any questions with regards to sourcing a buy to let property or looking for property management, we would be delighted to assist. Call direct on + 44 (0) 207 993 4081 or simply send an email for a fast response.