Buy to let investors cash in on inflation-busting yields

Buy to let investors cash in on inflation-busting yields

16:59 PM, 25th March 2011, About 13 years ago

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The buy to let market has switched from making money on rising house prices to inflation-busting returns on rental yields.

Latest figures from LSL Property Services – the UK’s biggest letting agents – and the Association of Residential Letting Agents (ARLA) show net yields are hitting an average 5%.

Few savings accounts or ISAs can match this return – and only a handful of long-term investment bonds come anywhere close.

Suddenly, putting cash in to investment property has become an option for investors with cash to stash.

ARLA has recognised this and released a top tips guide for new buy to let investors – here’s a digest of their best advice:

  • Research your investment – Buy to let is a long-term investment and ‘average’ rents and house prices are just that. Look at the best place to invest for you and how that local market performs – the rental market suffers ups and downs, and behaves differently from region to region. It’s critical to select the right property in an area you have researched in detail.
  • Check your figures – Shop around for the best buy-to-let mortgage deals and take advice about setting a competitive rent. These figures affect your profits. So it’s essential to get them right.
  • Protect your property – Take out landlord insurance and consider rent guarantee cover.
  • Cut the risk of arrears – Credit check prospective and reference their employers and any recent former landlords. Around 40% of ARLA letting agents recently reported an increase in tenants struggling to pay their rents.
  • Licensed to let – Make sure any letting agent is registered with ARLA or the new SafeAgent scheme. These have client money protection and dispute procedures in case landlords have problems with unscrupulous agents.
  • Don’t forget deposit protection – Deposit protection requires all deposits are protected under a government-backed scheme.

ARLA Operations Manager Ian Potter commented: “Buy-to-let properties can prove to be a sensible, long-term investment, but consumers must do their research first in order to achieve success.

“Becoming a buy-to-let landlord is a decision which must not be taken lightly. Landlords must be aware of the legal responsibilities to their tenants and ensure that their money is protected.”

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