Recent data has revealed that a growing number of first-time buyers are looking to purchase a property to let out, rather than live in. This development is a marked change from previous trends, with many lenders not even offering buy-to-let products to first-time buyers, so why is this option getting increasingly more popular?
Buying a property elsewhere could mean you need to save up less money for an equivalent percentage deposit, so can get onto the ladder more easily. The coronavirus pandemic and its financial impact may be why this option is becoming increasingly popular: low deposit mortgages have been largely withdrawn from the market, meaning first-time buyers either need to save up more money or opt for a less expensive property.
For first-time buyers, purchasing a property to let out will probably be less straightforward than buying one to live in because many lenders don’t offer mortgages to suit this situation. As a result, you may need to use a specialist product, which is less widely available.
There are also other factors to consider, for example, a landlord’s responsibility for tenants. You can take this responsibility upon yourself or use a lettings agent. An agency may be more practical, particularly if you live a significant distance from your property, but this service will cost you. You should also be aware that you may have ‘void periods’ without any tenants, which could impact your rental income. A buy-to-let property can also impact how
much stamp duty you pay on future purchases.
Despite the challenges, a buy-to-let can be a good investment. Just make sure you do your research and speak with your mortgage adviser who can let you know which mortgage options are available for you.
Everyone wants a piece of land. It’s the only sure investment. It can never depreciate like a car or washing machine. Land will only double its value in ten years.
– Sam Shepard
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