Is Buy-to-Let Right for Me?


For many British residents, renting a house or flat has become an attractive alternative to homeownership. The CML (Council of Mortgage Lenders) recorded 19% of England’s properties to be rented – that’s 4.3 million households. And for landlords, buy-to-let mortgages are a great way of letting out more homes or becoming a landlord in the first place.

But if you’re letting in York (or planning to) is buy-to-let the best choice for you?

We’ll take you through the ins and outs of buy-to-let in York to help you make the best possible decision.

What is buy-to-let?

red brick house

The term refers to a special type of mortgage aimed at landlords. You take out a buy-to-let mortgage on a property you intend to let to tenants. You then use the tenant’s payments to pay off the mortgage, any other expenses that crop up, and keep any leftover money for yourself! If the value of the property goes up, this can also allow you to make a profit.

Unlike a normal mortgage, the amount you can borrow doesn’t depend on your earnings; it depends on the amount of rental income you expect to get from your tenant. The interest rates and arrangement fees are typically higher than normal mortgages, too, and not all banks offer buy-to-let mortgages.

What do I need for a buy-to-let mortgage?

form with tick boxes

If you want to start letting in York (or elsewhere) with a buy-to-let mortgage, you must typically meet several criteria:

–  You already own your own home

–  You have a good credit record

–  Your earnings are at least £25,000 a year

–  You are able to pay 25% of the property’s price as a deposit

The property you want to buy must also meet several criteria:

–  It is being used for rental purposes only

–  The property is self-funding (this means the rent will be at least 25% higher than the mortgage payment)

–  It is in good condition and not split up into different units

–  It costs at least £40,000

Who is taking out buy-to-let mortgages?

pensioner on a beach

Buy-to-let mortgages are traditionally more attractive to Baby Boomers and Generation X, because of the criteria you need to meet. Between owning your own home and earning above a certain threshold a buy-to-let mortgage might not be practical for young professionals.

Another thing to consider is this year’s pension increase. UK pensioners can look forward to a 3% state pension increase from April 2018, meaning they will be almost £200 better off over the course of the year. Although we must consider other factors like inflation and individual spending habits this could make buy-to-let a more attractive prospect, whether you’re letting in York or elsewhere.

Is there anything I need to know going into 2018?

students around a table

According to Which? landlords in 2018 have to consider a new raft of changes. They must register with a redress scheme in case they have any disputes with their tenants, and ensure the homes they let are energy-efficient. They may also risk appearing on a database of rogue landlords, though this measure hasn’t been written into law yet.

Another big change to consider is the length of tenancies allowed for buy-to-let tenants. Santander, one of the sector’s biggest lenders, now allows landlords to offer 36-month assured shorthold tenancies (previously, only 12-month tenancies were available).

This helps to guarantee your income for longer and could make your property more attractive to potential tenants.

While buy-to-let properties can’t be divided into individual units, they can be let to several people at once. This is Money suggests landlords can increase their returns by letting on a room-by-room basis rather than letting an entire house to one or two tenants.

What else should I think about?

toolbox

Like all landlords, you need to account for the possibility your property will be empty at some point and have money set aside to get you through these periods. Furthermore, you’ll be responsible for the property’s upkeep and repairs, so be sure to budget for this.

Buy-to-let properties are subject to all the usual costs like stamp duty (which is higher for landlords) legal fees and redecorating. You’ll also have to account for insurance, annual safety checks and income tax.

Whether you’re letting in York or elsewhere in the UK, new landlords must check if tenants have the right to live in the country before handing over the keys. Our letting team can carry out these checks on your behalf, meaning one less thing for you to think about.

For a more detailed breakdown of your responsibilities, check out our guide on the subject.

What are the benefits of buy-to-let? 

coins in stacks

–  It could potentially offer a big return on your investment if house prices rise

–  At the moment people are more likely to rent, making your buy-to-let property an attractive prospect

–  Reliable long-term tenants offer a steady, predictable income stream

–  If you’re retired, buy-to-let is a great way to supplement your income

–  It offers a better return on investment than other assets

What are the risks of buy-to-let?

piggybank with coins

–  To see a significant return on your investment you must be prepared to let the property for several years

–  You can lose a lot of money through upkeep, bad or absent tenants or shifting property prices

–  Some buy-to-let mortgages operate on an interest-only basis. This means that if a property’s value has dropped by the end of the mortgage term, you must pay the difference yourself

–  Selling the property later means paying several different fees, like exit fees and solicitor fees

Can Quantum help me with my property?

york city walls

Yes! If you’re considering letting in York, Quantum offers an in-depth letting service that can make buy-to-let much less stressful.

–   We can collect the rent every month before transferring it to your account. What’s more, we can chase late payments and send you a detailed monthly statement that lays out your income and expenditure.

–   We can visit your property regularly and discuss any maintenance issues with you and your tenants. This ensures you’re completely up to date on any upkeep or repairs that need carrying out. We also have a trusted network of maintenance professionals that we can call upon for help.

–   If you have any issues with a tenant after they’ve left, we can approach them in a friendly manner and resolve any issues.

–   We have an in-depth knowledge of the York area, along with the details of property assessment, collecting rent and other legalities.

–   We have no hidden costs. Honesty is after all the best policy, so we layout our initial setup fee and per-month management fee clearly from the start, so there are no nasty surprises for you to worry about.

–   And we can help you sell your property when you decide to no longer be in the landlord business.


If you’re thinking about finding buy-to-let properties in York and you’re on the lookout for an experienced lettings estate agent to manage the property for you, take a closer look at our Managed Service page here.

Alternatively, you call us on 01904 631631 or email us at homes@quantumestateagency.com.

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