Thinking about investing in a buy to let property? While this business venture has always been seen as a safe and sound investment, changes to mortgage interest relief and the surcharge on stamp duty have made landlords question whether buy to let is still worth it.
If you are having second thoughts about investing in a buy to let property, then the below blog should help you to make up your mind.
Read on to discover “is buy to let still worth it”, as well as how you can make the most out of becoming a landlord .
Are buy to let properties more risky than before?
As mentioned briefly above, there have been several recent changes to buying buy to let properties which will affect your decision.
Firstly, growth in the property market has slowed down in the last few years which means that this type of investment is already riskier than it was in the past.
Furthermore, an increase in stamp duty of 3% on second homes and buy to let properties has put many landlords off making any more investments in the property market. Not to mention the reduction in mortgage interest relief which gives landlords a flat-rate tax credit based on only 20% of their mortgage.
Is buy to let still worth the investment?
Yes:
Despite all of the above, buy to let still offers many advantages, especially if you are looking for a long-term investment.
Some of the most notable benefits of buy to let include:
Earn rental income
The most obvious benefit of investing in a buy to let property is that you will earn rental income. While this may not be as high as it once was, there are still several areas of the UK where buy to let properties yield a high return including city centers such as London, Liverpool and Glasgow.
Generate capital growth
Again, even though growth in the property market has slowed down in the past few years, that doesn’t mean that you won’t generate capital growth as the value of your property increases over time.
Insurance protection
If you are concerned about loss of rental income or costly damages to your buy to let property, you should know that landlord insurance can protect you against all of this and there are some very reasonable deals currently on the market.
No:
That being said, not everyone is suited to investing in the buy to let market and there are some drawbacks to this type of investment prospect. These include:
- You will pay more tax
- You may fail to generate a rental income if you do not have insurance
- You will need to pay more stamp duty tax
- You will need to keep on top of the maintenance of the property
If you are not sure if buy to let is the right investment for you and your future, it can be a good idea to speak to a financial adviser before you make a decision, as they will be able to best advise you on this matter.
It is also true to be said that understanding the landlord licensing processes and regulations should be very high on your priority when deciding whether or not to buy to let.
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