There are several reasons why people decide to become a landlord, whether this is an investment decision or based on personal circumstances, the UK property rental sector is an attractive prospect and can achieve a higher return on investment than traditional savings.

80% of my clients are landlords and I also advise several estate agent lettings teams to help them to guide their clients through the tax obligations and allowances available.

It is a shifting market and landlords’ obligations can seem daunting especially when starting out on your journey as a first-time landlord.

Many thanks to Mary West from the Money Consultancy and Victoria Lyall from Finders Keepers for their input into this article.

Finding your property

The private rental sector is facing many changes so if you are looking for an investment property to purchase it is important to research the attractiveness of the area you are looking to purchase as well as the property itself.

If you are using a letting agent such as Finders Keepers, they can advise you on the local hot spots in the area you are looking for as well as those with rental properties which will realise a high rental yield.

“Rental yields are probably the most important investment metric used by landlords investing in residential investment property”

Comments Victoria Lyall from Finders Keepers

The rental yield is calculated by measuring the annualised value of rents as a percentage of the underlying capital value of the buy-to-let investment. Lyall believes that property is an excellent place for your investment for a number of reasons:

• Housing Supply: in areas such as Oxfordshire there is an imbalance of supply and demand
• Pension: Property still offers a solid return, and values are on a long-term rising trend. It also provides a regular, passive income through the rental payments. Of course, there can be no guarantees with any investment, but generally property provides a long-term profit
• Tangible asset: Owning a buy-to-let investment means you have a tangible asset, and one that you could potentially improve through refurbishments, upgrading and redecorations.

Finders Keepers offers a 360° service whereby they can help you to source an investment property to suit your requirements but they also have in-house refurbishment and furnishing divisions to help you maximise its potential.

Mary West of the Money Consultancy advises that it might be a good idea to dip a toe in the water at the start of your journey as a landlord.

“If you are a new investor, you need to start small as you get a clear understanding of the market. Starting small gives you a firm foundation and lets you decide if you need to expand slowly"

Starting small also means that your Stamp Duty Land Tax (SDLT) payable is lower. The current SDLT threshold for residential properties is £125,000, of course, in most areas of England and NI, properties far surpass this value, but as the SDLT rates for residential property are on a scale from 0% to 12%.

There is an additional 3% surcharge on additional residential properties (taking the maximum to 15%) but there also may be some SDLT reliefs available, for example multiple dwellings relief. If you are not present in the UK for at least 183 days (6 months) during the 12 months before your purchase, you are ‘not a UK resident’ for the purposes of SDLT. You will usually pay a 2% surcharge if you are buying a residential property in England or Northern Ireland on or after 1 April 2021.

Whether you are looking to rent out your second home or expanding your existing portfolio, we can make sure you get the most out of your property. Contact me for an informal discussion on how we can help.