If you’ve been paying attention to the financial news, you’ll probably have noticed that there have been numerous articles highlighting the increasing challenges faced by property investors in general and buy-to-let property investors in particular.  The fact still remains, however, that the UK has a high demand for property and especially for high-quality rental property.  This means that there are still very respectable profits available to astute property investors who operate in the right way.  If that sounds like something which would interest you, then here is a beginner’s guide to property investment.

It’s not just an old joke, location really does matter

If you’re planning on managing a property yourself, then you’re probably going to want to look for properties which are within practical travelling distance of where you live.  These days, however, property investors, especially beginners, might want to give serious consideration to using a lettings agent to ensure that every aspect of their buy-to-let business is managed in total compliance with the law.  This does add to costs, but it also means that investors can look at a far greater range of locations since they will not need to travel to them personally (or at least not often).

Teamwork makes the dream work

For “hands-on” investors, having an address book full of useful contacts (such as reliable and proficient tradespeople) can make life go so much more smoothly.  For “hands-off” investors, a good lettings agent can be more than worth their fee.  In either case, having an accountant on board is not just a convenience from the point of view of managing your tax returns with minimal hassle, but an investment from the point of view of minimizing the amount of tax you have to pay.  You may also want to have a lawyer on your side, particularly if you are a “hands-on” investor.  As previously mentioned, the UK buy-to-let market is becoming increasingly regulated and penalties for non-compliance, even inadvertent non-compliance, can be very severe.  You might also want to consider becoming a member of relevant associations and other networks as a handy way of keeping on top of developments in the property market and of benefitting from other people’s experience.

Make sure your portfolio is built on solid foundations

A rising tide floats all boats and a rising property market effectively gives property investors some leeway to make mistakes and escape unscathed (or with very little damage done to them).  When the property market is stagnant or falling, property investors need to tread more warily.  This has always been the case but recent developments have made it even more important that investors get their sums absolutely correct right from the off.  In this context, there are two changes which are of particular note.  The first is that Mortgage Tax Relief is in the process of being abolished, which could have significant implications for investors on higher incomes.  One way to deal with this is to hold property within a limited company, however, this carries a number of implications which need to be clearly understood before a property investor can make an informed decision as to whether or not this is the right approach for them.  It’s also worth noting that if you are a new property investor and choose to go down this road, you almost certainly want to buy your property through the company right from the start to avoid the costs of transferring it into the company further down the line.  Secondly, the government has now finally banned landlords charging additional fees to tenants, which means that it is now utterly vital that property investors have a clear view of all the expenses they can reasonably be expected to incur (and ideally a margin of safety) so that these can be incorporated into the rent tenants pay. Your property may be repossessed if you do not keep up repayments on your mortgage. The FCA does not regulate some forms of buy to let mortgages. The FCA does not regulate tax planning and we act as an introducer for it.