Is Buy to Let still a plausible investment option?

Wednesday, July 25th, 2018

Despite recent regulatory changes causing a squeeze from a tax perspective, figures and calculations provided by the specialist mortgage lender Kent Reliance indicate that buy to let property investment could still deliver significant returns for landlords over a 25-year term.

Their calculations assume house prices and rents rise by 1 per cent in each of those years. Then, through a combination of rental income and capital gains, they forecast that over that period, a landlord paying basic rate tax might expect profits (net of property maintenance and mortgage costs, but before applying any calculations for inflation) of around £265,000. Given the same parameters, landlords in the ‘higher rate’ tax category might expect around £203,000. 

Alternatively, if the property is not sold, then a landlord might still generate net rental profits of around £65,000.

Of course, real investment returns will vary over time and on a case by case basis, so prospective purchasers should always seek independent professional advice.

Here at Caboodle Finance, we recognise that regulatory and taxation changes have had a significant impact on the “market dynamic” and this may have reduced the appeal of a buy to let investment for non-professional landlords. That said, we also believe that ongoing high tenant demand and mortgage lender appetite means that the buy to let market still has exciting potential. 

As with any investment, funding costs are a key component, so using a professional mortgage broker to help determine the most suitable buy to let mortgage could be one of the most important financing decisions a landlord will make. 

Our expert team here at Caboodle Finance of Sutton Coldfield, Birmingham are available to help. Call us in complete confidence on 0121 308 9114, or alternatively, complete the enquiry form HERE and one of our friendly team will get back to you.

We very much look forward to speaking with you.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT. CONSOLIDATING DEBTS MAY INCREASE THE TERM AND TOTAL AMOUNT PAYABLE.

Your initial consultation is free and you are under no obligation to proceed with a mortgage we recommend. There will be a fee for mortgage advice. The exact fee will depend on your circumstances and may be reduced depending on the loan amount and any commission we receive from the lender. It is estimated that the fee will be £595, but it may range from £495 to 1% of the amount you borrow. The fee is only payable on completion and can normally be added to the mortgage. This will be discussed and agreed with you before you make an application. Please ask for a personalised illustration.

Secured loan rates from 3.95% APRC, although we have plans available up to 29.9% APRC which allow us to assist customers with the most severe credit problems. The overall cost for comparison is 7.65% APRC. For secured loans a broker fee up to 10% of the loan amount borrowed may be payable on successful completion. A lender fee may also apply. The actual APRC available will depend on your circumstances. All loans are subject to status. Please ask for a personalised illustration.

The guidance and/or advice contained in this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK.

Caboodle Financial Services Ltd, registered in England at Mere Green House, 46-48 Mere Green Road, Sutton Coldfield, West Midlands B75 5BT (number 08044670).
Caboodle Financial Services Ltd is an appointed representative of PRIMIS Mortgage Network (PRIMIS), a trading name of Advance Mortgage Funding Ltd which is authorised and regulated by the Financial Conduct Authority. PRIMIS is only responsible for the service and quality of advice provided to you in relation to mortgages, protection insurance and general insurance products. Any other product or service offered by Caboodle Financial Services Ltd may not be the responsibility of PRIMIS and may also not be subject to regulation by the Financial Conduct Authority. The Financial Conduct Authority does not regulate some forms of Buy to Let.

© 2020 Caboodle Financial Services Ltd


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