Is Buy to Let Still, a Good Investment in 2020?

Demand from private renters is on the rise when one in five UK households are renting today. Even though the government has made tax changes that have reduced the profits of many landlords, will the business being bought now make a good investment?

Heath Gunatra, managing director of Visionary Finance, says: “Despite efforts to prevent the growth of the buy-to-buy investment market, many have argued that it has shown some seriousness.” Still a great story. “

If you’re on the New Year’s to do list for becoming a landlord, here are eight things you need to know:

1, Understand the tax:
Rent income is included in any other related income you receive during the tax year. You must declare this income on the Self Assessment Tax Return each year. It can be claimed to cover some expenses and reduce your tax bill compared to your rental income. Although homeowners will only be able to claim a basic rate tax rebate on mortgage interest at 20% from April – this could have been claimed at a higher or higher rate. Property Income Allowance means that property owners can receive income tax on each ntal 1000 rent.

2, Stamp duty:
A 3% additional rate of stamp duty land tax (SDLT) is now payable on the purchase of additional properties such as beauties.

3, Find advice on mortgage purchase pricing:
When it comes to finding a mortgage to purchase, one of the benefits of using a broker is to brainstorm. While many UK brokers charge a fee, choose a broker that offers their brokerage service as completely free of charge as Visionary Finance. They offer full market service, which means they have access to over 60 different lenders, including mainstream and specialist purchasing lenders. This will help ensure that you get the best deal for your individual situation.

4, Calculate rental income:
Meeting your expected profits is an important guide for calculating whether an investment is worth your time. Make sure you factor in stamp duty, lawyer fees, mortgage payments, agency fees and maintenance when you reduce the numbers. You should also be prepared when the rental property is empty.
Net production is calculated after deducting all costs. Everything from transaction costs and current expenses such as stamp duty, to mortgage payments on property to rental income. You can crunch some numbers using a calculator to calculate the purchase.

5, Location matters:
Ensure that your investment property is in the desired area. You should not buy in an area just because you like it. The number needs to increase.
Birmingham, Manchester, Liverpool, Sheffield, Leeds, Leicester, Nottingham, Oxford, Cardiff and London are the top cities (for sale) in the UK to buy and sell in 2020.
Birmingham came in at number one because in recent years all cities in the UK outside the capital have progressed, which has reduced the scope of housing. As a result, property prices have risen 19.3 percent since 2014 and Knight Frank predicts another 12.5 percent increase by 2022. What’s more, according to property data, the city’s rental output is comfortably sitting at 4.4% and 5.3%. But do your homework at the location of your choice and see how the numbers stand out.

6, Choose your rent wisely:
Buy something that performs well in the selected market. One of the most important characteristics listed by tenants is the abundance. Space is important to the tenant because he or she does not feel that they are growing the property and chooses to move. Having decent storage will mean that tenants will enjoy a less chaotic home – and hopefully they will stay longer. It is important for partners to have equal-sized bedrooms, while an excellent garden family is a must.

7, Ownership Options:
Reducing mortgage interest tax deductions for landlords has further encouraged them to move their properties to a limited company. If this property is owned by a company, all expenses, including mortgage interest payments, can be deducted as business expenses.
Profit is corporate tax at 19%, which significantly reduces the tax bill for high-rate taxpayers.
As a homeowner, you can earn income in the form of a profit. The first £ 2,000 profit in 2019-20 is tax-free, but if you live in a higher-rate region, you, as a baseline rate taxpayer, pay more withholding tax at 7.5%.
Establish a limited company for professional advice. Is something Getting a mortgage on a limited company-owned property means getting a special deal from the lender. A broker can help you.

8, Don’t forget about resale:
Although investing in residential property is a long-term commitment, and investors coming into the purchase usually do not enter the market in terms of sales, it is important to have an exit strategy.
If your circumstances change and you need to sell to get access to your capital, you need to make sure that the property you buy can be sold without any apparent complexity. Of course, market conditions are out of your control.

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