Investing in London’s property market can be incredibly profitable, if you do it right. There are many financial complications and legal loopholes which make the great idea of buying a property to lease out all the more complicated.
Firstly, research the London property market. If this is your first venture as a would-be landlord ensure you are aware of the risks as well as the benefits. Property investment has paid off massively for some investors who bought cheap houses in run down areas which have become trendy hotspots over the years. A house in bohemian Brixton in 1985 cost around £32,375 now a 2 bed flat sells for around £400,000, although it may take years buying in the capital certainly pays off.
Leasing a property gives you the opportunity to make money on your new property whilst its value is growing but this can be at a huge expense. Choosing the right mortgage on your property is the first thing to do. You need to do some research and get a buy-to-let mortgage rather than a domestic one. The buy to let mortgage scheme at Saffron Building Society is particularly effective as it offers no early repayment charges and ensures that the rental payments cover at least 125% of the mortgage payments.
Choosing the right area is essential but also tricky for a number of reasons. It’s hard to decide what’s going to be up and coming in the next few years and you need people to want to live in your property now so make sure it’s desirable. Consider the type of people you want to live there. If it’s young professionals and students it obviously needs to have a few bars and restaurants and other young people in the area. If you’re thinking families, check out the schools in the area and parks. Good transport links into central London are essential so distance to a tube station needs to be considered.
Finally, think about your distance from the property. If you choose an area two hours away from your home it’s unlikely you’ll be able to keep a close eye on it. Being an on hands landlord also means you’re able to form relationships with your tenants and in effect gain their respect which should in turn mean they wish to stay longer and look after your property better, which is a financial win-win.