Property Investment

Buy to let was originally conceived by the Association of Residential Lettings Agents (ARLA). It was initially supported by a small panel of eight mortgage lenders. These were the first mainstream financial institutions in this section of the market which has now grown to more than 50 which includes most of the high street banks and building societies. Renting out a property is always a good alternative if you don’t need to sell your current family home. A recent study from a leading building society showed that on average property values have risen by a factor of 22 over the last 30 years, however, this does not take into account inflation.

Most lenders will expect you to put down a deposit of at least 15% and provide them with a set of accounts to prove you earn enough to take on an additional mortgage. The more deposit you put down and the more serious a player you are, the easier it is to secure further mortgages. You may want to buy properties at auction and some providers will offer you a mortgage in principle before the date of the auction as you will need to pay the entire balance to the auction house within 28 days. Most will advise an interest only option as this is cheaper to fund and allows you to buy more with any future capital. You could then, in time, re mortgage the properties and buy further homes.

An increase in online interest regarding property and it’s investment value, has encouraged property investment companies such as 1 st Property Investment to offer additional opportunities to fledgling investors. Dealing mainly with off plan properties, they are able to negotiate discounts of up to 20% off current market values direct from the developers, whilst offering a fully managed service. An Ideal opportunity for the one off punter as well as the more serious multiple buyer. The selling point to buying off plan is that your ‘plot’ is growing in value before it has been built but you don’t have to pay the mortgage on it until it has been signed off by the builder and the mortgage process has reached the completed stage.

For more information about 1 st Property Investment and the investment opportunities they can offer click here to go direct to their web site.

Unfortunately, all rental income is going to be taxed. The tax year is normally from April 6 th to April 5 th. There are areas of expenditure through the year that you can claim against your rental income and these include;

Agent’s fees

Reasonable expenses if you travel to property

Buildings insurance

Contents insurance

Service charges

Legal fees when drawing up the lease

Utility bills

Interest payments on your mortgage.

Claim all of the mortgage fees for the year (if you have an interest only mortgage)

You can carry a minus figure forward on future profits.

You may at some point decide to sell a property and hope to spend the proceeds on a home abroad or spend the profit living in comfort for a few years. That does seem a good way to ease financial pressures, except that you will have to pay capital gains tax on the profits of the sale. Because of this you will need to keep all the records of any financial transactions during the original purchase of the property including;

Estate agents original fee

Accountancy and legal fees

Stamp duty

Taper relief comes into play when deducting the amount of CGT you owe. This relates to the time you have owned the property, particularly good if you have originally lived in it. A 5% deduction is added on a property you have owned for more than 3 years, this increases by 5% each year with a limit of 40%.