Why It’s A Great Time to Be a Landlord

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As interest rates continue to rise, you might be excused from thinking that now isn’t a great time to have a mortgage, or to invest in property. You might even thing that taking on additional properties with the view of operating them as rentals might seem like more trouble that it’s worth. However, as house prices start to dip, rental prices are surging to an all-time high, with demand outstripping supply across the rental market nationwide.

If you’re considering buying your first Buy To Let property, or expanding your existing portfolio, there are a few things to consider before making your next purchase. 

If you’re new to the Buy To Let market, you’ll need a larger deposit than is required for a residential property, generally around 25% of the total cost, vs 5% for many residential mortgages. 

You’ll also have to contend with the new government regulations, including a stamp duty surcharge of 3% on rental properties, and a change to the tax laws, meaning you can’t deduct mortgage costs from rental costs when calculating income; instead, you now have to pay tax on the entire rental amount. There is a 20% tax credit available to landlords, which is helpful, but these additional costs are something to keep in mind if you’re looking to dip your toe into the Buy To Let market. 

Mortgage fees and interest rates can also be higher, and you will have to demonstrate that the property will be profitable in order to qualify for a mortgage.

If you’re looking to invest capital, most income-based investment funds tend to offer returns of 5%, so if you’re going to take on the additional fees and work of letting a property, the yield needs to be more than this to make it worthwhile.

And, finally, decide how hands-on you’d like to be; do you want to run all the marketing, maintenance and tenant management yourself, or would you prefer to let a company do that for you? If you do choose to put your property in the hands of an agent, their management fee is another cost to add to your calculations when working out if this is the best decision for you

However, don’t let that put you off! 

As a landlord or investor looking to get their first Buy To Let property or even expand their portfolio, this is a market in which to create some fantastic yields. With rents at an all time high and more tenants than ever before looking for properties, it’s a great time to get into the lettings market. The key to success is to do your research, know the area and which type of properties are in demand, and not pay over the odds. Buying the right place for the right price at the right time can bring in excellent returns. 

Plus, if you’re looking to minimise those fees (and aren’t we all?), consulting with an independent mortgage broker to get the best possible deal can save you in the long run, as can setting up a limited company through which to rent the property. However, once again we recommend consulting with an expert before doing so, to make sure that this is the best move for you in financial terms. 

As the rental market continues to surge, this can be a fantastic time to get into Buy to Let, or to expand your existing portfolio. Birmingham, with its mix of students, young professionals and families is a vibrant and growing city. There’s a huge mix of property types, from central studio flats to suburban detached houses, offering plenty of variety for prospective landlords. Add in national transport links, an exciting arts and entertainment culture, and continued regeneration projects, and you have all the elements you need to drive a growing rental market. 

It’s a great time to be a landlord, so do your research, pick your property, and take the plunge!

Are you thinking about letting your property? To find out more about our Landlord Services, visit our website here: https://jameslaurenceuk.com/lettings/letting-your-property/

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The people we've helped
  • We recently switched from another letting agency to James Laurence, as we found their team so warm and friendly and loved the local aspect of the agency. The team have absolutely exceeded our expectations, making the changeover feel so seamless and finding new tenants for our apartment at really short notice. Lotti could not have been more wonderful to work with, going completely above and beyond to ensure our tenants could move in just before Christmas. We felt an immediate affinity with her and have so appreciated her attention to detail, quick thinking and creativity. She has made us feel so at ease, supported and like our property is in the safest of hands. Charlotte and Melissa have also been so helpful and lovely to deal with during the process. Having worked with several other agencies in Birmingham, I cannot recommend James Laurence highly enough. Look no further, they are the best!

    Julia Collins Andreu Avatar Julia Collins Andreu
    28 December 2022
  • The team at James Laurence was very helpful when I tried to find an apartment in Birmingham. I was in contact with a different letting agency but things fell through and they couldn't help me. A colleague of mine recommended James Laurence Lettings so I emailed them immediately since I was was moving from Sweden and the move would take place in less than a week. The team at James Laurence responded within 5 minutes and managed to offer me a few different apartment-options. Things proceeded quickly and smoothly and just a few days later I had they keys to the apartment. James Laurence helped me every step of the way and went above and beyond to accommodate my requests. The only minor negative thing I can say is that the interntal communication could be improved a tiny bit. I received slightly different information depending on who I was speaking with at the time. When I said I received different information earlier the person I spoke to said she would talk to her colleagues and then get in contact with me later with the "correct" information which she did and the issue got solved very quick.

    Elias Avatar Elias
    15 October 2022
  • Our experience with James Laurence Estate Agents was absolutely fantastic! Melissa Wilson made the application and referencing process smooth and easy with excellent communication. Everyone we spoke with from the office was kind, helpful, and welcoming. To top it all off, the loft we moved into was even better than the pictures! We are thrilled with our new home and we would absolutely recommend James Laurence to anyone looking for a place to live!

    Dominic James Avatar Dominic James
    2 October 2022
  • I have been very impressed with James Laurence, who have recently sold my property. Having previously had a poor experience with Purple Bricks, I instructed James Laurence to help sell my property. I have worked with Henry throughout the whole process and have found him to be very professional and knowledgeable as well as being efficient. It can't be stressed enough how important this is to have an estate agent that responds quickly, negotiates well and truly understands the market (especially during uncertain times like recently with the cover pandemic). I have briefly worked with Caroline and some of the other team members who also seem to be very efficient and friendly. Thanks again to James Laurence who I would fully recommend to anyone looking to Buy/Sell in Birmingham.

    David Jolly Avatar David Jolly
    16 June 2022
  • I recently sold my property with James Laurence, and the overall experience was great. They demonstrated a good knowledge of the Birmingham property market when discussing sales strategy, marketing and pricing (more than I was expecting) towards the beginning of my experience with them. This showed when we achieved 2 asking price offers within the first couple days of showings. Once an offer was accepted, their support did not stop there, Caroline (Sales Progression) did a fantastic job at liaising between myself and the buyers side, helping to progress items and remove any potential blockers. I would fully recommend James Laurence to anyone looking to Buy/Sell in Birmingham.

    Jack Darby Avatar Jack Darby
    20 May 2022