01954 718660Lettings Specialists • Property Management Services • Investment Property AdvisorsLandlords

Property Investment Cambridge

Are you considering a property investment in Cambridge? Award Property Management Ltd has helped many investors enter the residential lettings market with advice and support, both in the purchasing of their first rental property and in building their property portfolio.

As with all areas of financial investment, care is needed and a good understanding of the potentials and pitfalls should be gained before a decision is made. The help of a professional organisation, with knowledge and experience in the sector, is often vital in making sure a sound investment is secured. Award Property Management Ltd can provide this professional support structured to each individuals requirements and priorities.

This guide takes you through some of the important steps to be considered when deciding if rental property investment is the right choice for you.

THE PRIVATE RESIDENTIAL RENTAL PROPERTY SECTOR AS AN INVESTMENT OPPORTUNITY

There are many reasons why people rent their home, social and economic factors play a large part in the decision to be or become a tenant. Employment mobility, family circumstance, personal choice and inability to access the realms of property ownership all contribute to a part of the housing market that has grown significantly over recent years and shows all the signs of continuing to do so.

Over recent years there has been constant reference in national and local news regarding the shortage of homes and lack of house building to meet an ever growing demand for homes. Particularly in areas with a strong local economy, such as in and around Cambridge, social and economic mobility drives the demand for good quality homes. Local authority plans show a long term drive to provide new development and even substantial settlements to meet the growing need identified across the region.

Within this backdrop, it would be easy to think that investment in property for rental would be a simple choice guaranteed to be successful; however nothing could be further from the truth. A complex mix of financial issues, such as access to funding, tax implications, regulations, running costs, insurances and market conditions can all introduce risk factors that must be taken into account.

There is no doubt that with proper consideration and the right assessment of the risks involved, investing in property for private letting can produce financial rewards both in terms of short to medium term returns and capital growth over the longer term.

With our knowledge and experience, we can help you to understand the factors that might determine whether property investment via buy to let is the right choice. 

THE IMPORTANT POINTS

Below is an outline of some of the key points that need to be given consideration before the decision to proceed is reached. 

WHAT AM I SEEKING TO ACHIEVE?

This might seem an obvious question, but Landlords have differing demands from their investment property portfolio. It may be that a regular income is sought to fund another part of an individual’s lifestyle, alternatively the decision might be taken to build an equity that can be released later in life. It is easy to assume that all Landlords are seeking short term return and long term capital growth and whilst this is a sound aim, there are many other reasons why people buy property to let.

HOW CAN I FUND MY PROPERTY INVESTMENT?

We are not financial advisors and are not in a position to make recommendations on how people should manage their financial affairs. Whether funding is provided from savings or secured from a lender, it is important that advice is sought from an expert financial advisor. There is no doubt that the turmoil in the financial sector over recent years has affected access and availability to funding and we would recommend the help of a specialist mortgage advisor in the buy to let funding sector is consulted. (See our Landlord Resources page for recommendation).

WHAT PROPERTY SHOULD I PURCHASE AND WHERE?

The decision about what will make a suitable buy to let property will differ for each individual. Factors such as the location, market demand, funds available and the objectives to be achieved will all play a part in determining what to buy and where it should be located. Once we know the particular details, we can assist an individual in finding the right property to meet their stated requirements.

Our guidance will cover areas including: locality and position, type, size, presentation and target audience. We are happy to undertake the search for suitable properties which we can then present to you with our recommendations; we can also visit properties to assess them on your behalf to gain a perspective of their potential and pitfalls.

WHAT RATE OF RETURN CAN I EXPECT?

There are various factors that will have an impact on the rate of return achieved. Loan interest, insurances, leasehold or management charges, letting fees, taxation (some offset is possible) and maintenance costs all need to be taken account of. Owners must also factor in the potential for any void periods during the year with associated running costs whilst the property is empty and of course capital payments on any loan used for the original purpose.

As part of our assessment of any potential property we can provide some outline of the likely gross yield that may be achieved, however this will inevitably be based upon some assumptions and may vary due to costs which are not known to or foreseeable by us. Award Property Management Ltd can accept no responsibility for the accuracy of any potential yields suggested due to the variances that may be involved.

WHAT ARE THE TAX IMPLICATIONS?

It is impossible for us to provide a definitive answer to this question. It is likely that once you venture in to the world of property letting, you will be required to complete an annual self-assessment tax return.  Tax liability is dependent of course on personal circumstances however in principle profit earned from letting a property is classed as taxable income by HMRC.

There are costs and charges that can be claimed to offset any tax liability, these include loan interest charges, letting agent fees, some maintenance costs and others. We can provide an annual statement of income and costs for properties under our management and this will help to calculate the ‘net’ profit on which tax is to be paid. We would recommend that advice is sought from a qualified tax advisor to ensure your liabilities are property determined. (See our Landlord Resources page for recommendation).

If you have reached the point where you think that buy to let investment is potentially an option for you please call us, we can support you in every step from developing your plans to purchasing and letting your property to quality tenants.