Properties are like people, they come in all different shapes and sizes, some are older than others, you can find them across the UK (and indeed all over the world) and there’s a whole lot more to them than you can tell from a picture on a website.
With that in mind, here are some tips for new property investors to guide them to finding their perfect property or even properties.
Residential or commercial property?
Residential buy-to-let is still the mainstay of property investment in the UK and given the importance of the private rented sector, that’s probably just as well.
There are various sub-niches of residential buy-to-let such as houses in multiple occupation and short-term lets but the unifying factor is that they are legally all considered properties which either are or are intended to be a person’s main residence.
Commercial properties, by contrast, are, as their name suggests, intended to be places of business. Ironically, however, some of the best opportunities in commercial property are in the sectors of purpose-built student accommodation and care homes, both of which are in extremely high demand.
What market do you intend to target?
There are basically two ways to approach this question. One approach is to look at a particular area, find out which demographic groups need accommodation and then choose a property which will appeal to (at least) one of those markets.
The other is to think of a demographic group you wish to target and then look for parts of the UK where this group is currently underserved. In either case, location will be a key factor to consider and therefore deserves serious consideration.
Even if your budget is tight, be careful of “bargain” properties, as the old saying goes, “if something seems too good to be true, the chances are it probably is”, by contrast you could make your money go further by looking for properties in areas which are due for regeneration. The Midlands and the north of England are both good places to look for these.
Beware of leases
Leases are a fact of life in most of the UK and while they generally apply to flats, there are increasing numbers of new-build houses sold on a leasehold basis. Leases can be horrendously complicated and it is strongly recommended to have a lawyer read them and explain their implications to you before you decide whether or not to sign it.
There is, however, one salient fact to remember, which is that it is highly unlikely that you will be able to get a mortgage on a property if the lease has less than 80 years left to run on it.
This means that if you are a cash buyer you may be able to pick up bargains by looking for property where the less has run down and even with the costs involved in renewing it, you may still find yourself in profit (especially given that Stamp Duty only applies to the purchase price of a property). If, however, you need financing, then you will have to pass on these properties.
Author Bio
Indlu are lettings agents in Denton, Manchester who offer a no let, no fee lettings service as well as a free online rental valuation.
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Daniel Peacock