Buy To Let (BTL)

What is Buy To Let?

Buy To Let (BTL)Buy to Let (BTL), also known as BTL, is a property investment strategy whereby a property is purchased with the intention of not being lived in by the owner, but instead specifically to be let / rented to tenants. It was the introduction of the Assured Shorthold Tenancy (AST) in the mid 1990s which changed the willingness of mortgage lenders to provide finance to landlords keen to invest in buy to let properties. However, since the recent credit crunch in 2007, the number of buy-to-let mortgage lenders in the market and the terms offered to would buy-to-let landlords have been severely constrained.

How to finance a Buy-to-Let investment?

The most common way to fund a BTL investment is through a Buy-to-Let mortgage, which is a specialist mortgage product for homes you wish to buy to let out. They work in the same way as standard mortgages, although rates are higher, typically by around 1% or 1.5%, as there is a greater risk to the lender. This is due to landlord usually relying on rent from their tenants to cover their mortgage costs, and therefore if there is a long period when the property is empty, also known as a 'void' period, there is a risk of the landlord defaulting on the mortgage. The amount you can borrow for a Buy-to-let mortgage is invariably linked to the level of rent your property is likely to generate. Usually the rental income must be between a minimum of 25% and 30% more than your monthly mortgage repayments. This is calculated on an interest-only basis however which is how buy-to-let mortgages are typically offered.

UK Property Investor welcomes BTL Joint Venture investment opportunities, both in terms of us either providing finance or expertise to the opportunity, so please get in touch if you have an investment opportunity you’d like to discuss with us.

BTL Benefits and Risks

As with all property rentals, the benefits for a buy-to-let landlord can include a stable income from rental receipts, as well as an accumulation of wealth if house prices go up over time. Rising house prices in the UK have made buy-to-let a popular way to invest in property. The main risk involves leveraged speculation where the landlord takes a loan to buy the property, with the expectation that the house can be sold later for a higher price, or that rental income will meet or exceed the cost of the loan. In the event the landlord is unable to meet their mortgage repayments due to a shortfall or lack of rental income, then the lender will repossess the property and sell it on, invariably below market rates for a quick sale, to recoup their funding.

BTL Yields

Recent research by BDRC for Alliance & Leicester showed that 71% make a profit, but 22% break even or make a loss. On average, English buy-to-let yields (the difference between the rent the landlord receives and the costs of ownership) were just under 5.5% in Q3 2007. This had fallen from over 7% in Q2 2002. In 2013 Gross rental yields ranged from circa 4% in exclusive central London locations such as City of Westminster and Kensington and Chelsea to over 10.6% in buy-to-let hotspots in certain areas of Birmingham, Merseyside and Kent.

BTL Leads

We have a network of Property Sourcers / Finders and Estate Agents providing us with a constant stream of qualified Leads for Below Market Value (BMV) properties for sale throughout the UK suitable for Buy-To-Let Investments. For areas of the UK where we are not currently actively investing, we are able to sell leads on to potential investors for a reasonable fee. If you are interested in hearing of suitable BTL Leads matching your investment budget and geographical location/s, then please complete the form below:

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