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What is buy to let?

Buy to let is an initiative launched in October 1996 by ARLA (the Association of Residential Lettings Agents) - see below, their members including Maitland Rachel and a panel of mortgage lenders. The initiative provides the private individual with the opportunity to invest in and purchase property to let with an outlay from as little as £5,000 without being penalised by mortgage surcharges or paying commercial rates of interest.

Why is Buy to Let so attractive?

Low competitive mortgage interest rates which take rental income into account for repaying the morgage.
Legal framework of Assured Shorthold Tenancies which are attractive to both Landlord and Tenant
Excellent returns from rental income.
Reasonable certainty of sustainable capital appreciation.

Some two million household rent through the private sector in the United Kingdom and with Gross Returns as high as 12-14% letting can provide an attractive form of income of investment growth. (Gross Return - the rent received before taking account of the cost of letting, such as maintenance, service charges, insurance and letting fees). With new working practices and flexible contracts people must be free to move around as and when jobs dictate. Renting gives them this flexibility.

Buy to let has been well received and encouraged by the knowledge that professional letting agents such aas Maitland Rachel will be advising on suitable properties for the rental creditworthiness of any Buy to let proposition.

ARLA has received thousands of enquiries and the lenders on the Buy to Let panel have already placed £55 million pounds of mortgages, with a similiar figure in the pipeline.

The average rental in Britain today hovers around the 10% mark and capital appreciation is likely to match, if not exceed inflation, for the foreseeable future. The private rental sector now looks a very attractive proposition for private investors.

What to Buy to let in Herefordshire


When purchasing property for residential investments it is important to take the following considerations into account:

PURCHASE AT THE RIGHT PRICE - It is an investment. Paying 'over the odds' will reduce your gross return. Maitland Rachel can offer professional valuations carried out by a chartered surveyor.

ACHIEVE A GOOD RENTAL INCOME DURING THE LETTING TERM- Some type of properties are more sought after that others and can therfore command a higher rental: disregard properties which may incur lengthy void periods. Maitland Rachel have a vast experience of letting and managing residential property and can provide invaluable advice on what is the best type of property to buy.

CAPITAL GROWTH - Capital appreciation on the property is likely to match if not exceed inflation for the forseeable future. Therefore in addition to a regular return by way of rental income, over the medium to long term, it is fair to expect an increase in the capital value.

RESALE - In order to maximize your investment return it is important when the time arises to sell the property that this is acheived easily. Therefore careful consideration of the aforementioned points will attract future investors to your property.

As a general rule the smaller property offers the better rental return. it is often shrewder to buy two small units rather than one large one.

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The Do's and Don'ts of Buying to Let

Do
Think of buying to let as a medium to long term investment
Do
 Seek advice from Maitland Rachel on local market demands. It is the experience of the established letting agent and their database that supplies the right answers.
Do
Get your sums right, If you are financing the purchase, will the rent cover borrowings and costs.
Do
Remember first impressions count. Budget to decorate, fit out and maintain to high standards to attract the best tenants and let quickly every time.
Do
Use an ARLA agent member as your letting agent. They are bonded, hold professional indemnity insurance to required standards, have been in in the business for a minimum of 2 years and are kept up to date with the latest legal and regulatory requirements.
Do

Protect your investment. Using the right agent can save you time and money.
Don't
Let personal taste cloud your judgement. Be sure the property you choose meets local market requirements.
Don't
purchse anything with potential ongoing maintenance problems. It will add nothing to the rental value and cost a lot to keep up.
Don't
Think that the running of your investment can be left to friends or relatives in your absence.
Don't
Use copy tenancy agreements or attempt to undertake them yourself without professional advice, or forget to issue the right notices or fail to have proper inventory and condition reports made before the tenant moves in. Leave all documentation to the professional agent. Maitland Rachel.
Don't
Furnish with second hand furniture or cast off soft furnishings. This will probably contravene Fire and Furnishings Regulations.

How to Buy to Let

Armed with suitable advice from Maitland Rachel you can start on a property search or Maitland Rachel can do this for you. Irrespective of the amount you wish to invest Maitland Rachel can find the right package for you, whether you wish to purchase property outright or with finance by way of Buy to Let Mortgage.

This information is for guidance only. The resposibility for the financial decision for Buy to Let can only rest with the investor. Most letting agents will not accept resposibility for the validity of investment, costs incurred or for mortgage arrangements made, although those who are also registered as financial advisers may do otherwise. It should be noted that as with any investments, returns and capital values can go down as well as up; and the investor should be fully aware of the terms and conditions applied by the chosen mortgage lender.

To T

4 St Nicholas Street, Hereford HR4 0BG
Tel: (01432) 370000 Fax: (01432) 342171
E-Mail: maitlandrachel@maitlandrachel.co.uk

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