A Brief Guide to Buying to Let in Aylesbury

What are you trying to achieve?

If you are considering buying a property to let out there are many things to consider. The first and most important is to establish clearly what it is that are you trying to achieve.

It may be income, capital growth, an investment that can be passed to children or a combination of all of these.

Not all properties meet each of these criteria to the same degree. As a general rule property with a high yield is more likely to suffer low capital growth and the reverse is also true.

Most landlords try to buy a property that has a sensible growth potential with a yield that will at least cover costs. A property of this type by virtue of its location and quality is likely to be suitable to pass on to children in later years.

Average yield in Aylesbury? 4% to 6%

What and where should you buy?

This is often driven by the landlords own experience and knowledge…we like to do what we are comfortable with! Nothing wrong with that.

Generally a two bedroom modern house in good location is the best buy. Not Victorian (too much maintenance), not a flat (lower capital growth due to strong supply), not a three bedroom house (lower capital growth and more wear from family occupation).

In a location that is generally well regarded locally (Fairford Leys, Watermead, Lavender Grange etc. the good modern estates). Pylons, main roads, train lines etc. do not have the same impact for tenants that may only be there a short time, if you are able to buy at the right price not an issue.

When should you buy?

Well this is always a tough one, a little like choosing the best time to have kids. Unless you commit it will never happen! When I bought my first buy to let after hesitating for several years I watched the market fall for the following two years. But right now having seen the growth of recent years it was the best thing I ever did. Remember you will only make a loss if you sell, just keep holding the property…buying a buy to let is a long term plan, you won’t get rich quickly unless you are very fortunate.

Will I have to pay Stamp Duty?

Yes…the rates payable for second home purchases changed in April 2016. Details here

Should I set up a company to purchase the property?

There are some advantages but they are limited unless you are buying several properties.

Will I need to pay tax on the income?

Almost certainly yes but you should take advice from an accountant and will need to complete tax returns annually.

What about Capital Gains Tax?

Yes you will need to pay CGT when you sell assuming the profit exceeds your annual allowance and purchasing costs. There are things you can do to mitigate this cost.

The future?

Many landlords have been successful in buying numerous properties using the equity gained in existing property. This is a great way to expand a portfolio over time.

 

This is a very brief guide only. The Aylesbury Property Blog contains much more detail and includes the journey of landlords that we have secured property for.

You can contact Keith Witchell of KRW Accountants here or call 01327 810373.

Contact me, Ian Davies on 01296 398555 ian@mortimersaylesbury.co.uk to discuss your plans in more detail.

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