8 REASONS TO CONSIDER BUY-TO-LET
1. Return on Capital – In Dorset, the gross return or yield can be as much as 5% for a quality rental property in a popular area. This should be the position from day one but of course you would expect this figure to improve with time.
Whilst Dorset generally doesn’t boast the eye catching rental yields of some other areas in the country, this is arguably because it can be considered lower risk with some of the best employment rates nationwide and because capital growth is often higher.
2. Capital Growth – According to The Land Registry average property prices in East Dorset rose 35% between 2012 and 2017. This is higher than the national average and is a considerable increase, especially when you are receiving a rental income as well! In 2017, the average property prices in Bournemouth were amongst the fastest growing in the country, second only to Cheltenham.
3. The RICS is predicting that rents will continue to rise over the coming years due to a lack of supply of rented homes and an increasing population. Many renters are sadly unable to save for a deposit to buy, especially in Dorset where the ratio between property prices and wages is greater than in other areas. Tenants therefore often have no option but to remain in rented property thereby furthering demand; Harker & Bullman frequently receive several good applications for any one property.
From the investor’s point of view, consistent demand means fewer void periods between tenancies and rising rents mean the return on the sum invested continues to grow.
4. Regular Income – unlike many other investments, with Buy-To-Let you will know what rent to expect each month and what’s more, with our Rent Guarantee and Legal Protection Cover you can have additional piece of mind that your investment is protected.
5. Security of Bricks and Mortar – many people say they feel safe investing in property because it represents more than just numbers on a balance sheet- your funds are providing a useful and tangible asset and you can even drive by and look at it!
6. Control – many Landlords like the feeling of being more involved with their Buy-To-Let property than if they had invested the money in Stocks and Shares.
For example, they will be able to make decisions such as improvements, the level of rent and choosing which tenants to accept. Landlords can be ‘hands on’ as much or as little as they like, undertaking work themselves or appointing an experienced Letting Agent like Harker & Bullman to do all the property management for them. Often there is an opportunity to add value – this could be a simple cosmetic makeover or new kitchen to make the property more appealing. Alternatively, works such as extensions or extra bedrooms could significantly increase the rent and further improve the Return on Investment..
7. Gearing – with interest rates still low, any funds just sat in the bank or building society are not working as hard as they could be. Low interest rates also mean cheaper borrowing! Many Buy-To-Let portfolios have been built using the principle of Gearing i.e. funds that would be enough to purchase one property outright could represent the deposits on (say) three properties which are purchased with the help of mortgages. Any capital growth is thus trebled.
8. Leverage – another unique advantage of owning rented property is that you can borrow against it. In other words, you may be able to release funds for a special project or rainy-day expense whilst still benefiting from any income the property generates as well as any capital appreciation.
