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If you're querying whether to enter the buy to let market, Jill Smith from Mortgage Advice Bureau explains why you SHOULD

BUY-TO-LET SHOULD I OR SHOULDN'T I

In the recent economic climate many potential investors question whether to enter the Buy to Let market.  When house prices first started to fall, many experts warned that Buy to Let investors might run scared, potentially prompting a house price crash. This didn't happen – in fact the Buy to Let market appears to be booming, benefiting from larger numbers of people renting and cheaper property prices.

The National Landlords Association (NLA) is the representative body for private-residential landlords across the UK and represents almost 20,000 individual landlords.

Increasing numbers of people are attracted to renting, as a simpler, more flexible alternative to home ownership. Gone is the view that renting is the only option for those who can't afford to get on the property ladder. Nowadays there are property savvy renters who prefer not having to worry about home repairs or concerns about making ends meet with potentially volatile interest rates.

Buy to Let loans are based on the property's value and its rental potential and although the market for Buy to Let Mortgages is not as good as it once was, there are still deals available.

Q. Is it the right time?

A. Despite uncertainties over the future of the Property Market in the UK, the Buy to Let sector is growing. The three key reasons for an increase are:

1. Deposit requirements and restricted availability of residential mortgages 2. More opportunities for people seeking flexibility and mobility with rented properties 3. Younger generations finding it more socially acceptable to rent rather than buy

Q. What benefits are there to becoming a landlord?

A. Now may not be a good time to sell so why not turn it around and let your property out, there are a number of potential benefits, here are some key ones:

1. Long term investment 2. A steady source of income, depending on where your property is and rental charges 3. Considerable tax advantages (tax breaks offered to landlords who rent out their property)

Q. Should I self manage or get a letting agent to manage?

A. There are pros and cons of self managing. Self managing allows you to keep your variable costs down; if you find tenants and manage the property yourself you could save money. Bearing this in mind you will need to find suitable tenants, draft up a tenancy agreement, ensure it's signed properly, and check references. In addition to doing all this you will need to be first in line for any maintenance problems.

However, if a letting agent managed your property it will save you all the hassle of running around, as the agency will do all the leg -work on your behalf.

Helpful Information

Landlord Associations

Landlord Associations are a good place to start as the advice and information will be invaluable. Three of the more well known Landlord Associations to join are:

• National Federation of Residential Landlords • National Landlords Association • Residential Landlords Association

Buy to Let MortgageS

Buy to Let mortgages are specifically designed for investors to borrow money to purchase property in the private rented sector in order to let it out to tenants.

Typically the interest rates that are offered on Buy to Let mortgages will be slightly higher than residential mortgage rates, and the fees charged in connection with these mortgages will also be higher. This is due to the perception amongst banks and other lending institutions that Buy to Let mortgages represent a greater risk. It is therefore essential that potential investors seek independent mortgage advice to ensure they secure the most suitable deal for their circumstances.

For further information on Buy to Let mortgages, contact Jill Smith from Mortgage Advice Bureau on

01782 664995 or email jillsmi@mab.org.uk