5 Considerations When Buying Property as an Investor

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For many people, investing in property is a secure place to place their cash during a time when interest on savings remains low and mortgages are relatively cheap. Some investors buy to let while others choose fixer-uppers to renovate and sell quickly. No matter what type of property investor you aspire to be, here is a quick guide to five things you should consider. Here Simon Nosworthy, Partner and Residential Property Lawyer at Osbornes, talks CEO Today through the property investment basics.

Know the area

Being familiar with the locality will help you spot a potential property bargain that can only increase in value. You can easily research recently sold properties to help you decide when a price and property is right, which means that you do not have to rely on estate agent estimations and possible unrealistic claims. Additionally, if you live near your investment, it is easy to keep an eye on your property and be readily available if any problems arise.

Have your finances ready

Shop around to get the best mortgage available. Speak to an independent broker but do your own research as well. Having your money ready means that you can move quickly when you spot the ideal property. Your mortgage broker can give you a letter confirming that they will lend you a specific amount of money, or you may already have a large deposit readily to hand. Either way, having your finances shored up shows that you are a serious buyer and leaves you in a strong position when it comes to haggling over price.

Remember to factor in Stamp Duty Land Tax and other fees

Stamp Duty must be paid on residential properties over the value of £125,000 (although if this is a second property that you are purchasing then you may have to pay stamp duty below this threshold) and on non-residential land and property over the value of £150,000. The government has a special calculator online that will help you get an idea of how much you must pay: it can be found at https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#/intro.

Your solicitor will usually submit the payment to HM Revenue and Customs stamp office on the day of completion but they do in fact have 30 days in which to attend to this. The stamp duty and other costs and disbursements associated with the transaction will be itemised on a cash statement sent to you by the solicitor before completion and add the additional cost to their fees.

Other potential fees include:

  • A valuation fee levied by your mortgage lender for assessing the property and establishing how much they will lend you.
  • Surveyor fees for services ranging from a basic survey to a full structural survey.
  • Legal fees for all the legal work required and also disbursements including searches fees, land registry fees and bank charges

When choosing a property consider the needs of your target tenant or buyer

No matter what appeals to you personally in a property, try to put yourself in the shoes of your target tenants or buyers. You should match your property to the locations and to the people that would choose to live there. For some folk the quality of local schools, transport and services may sway them towards a property. For others outdoor space is a must: even a small city balcony or patio can make a property more attractive. Students require somewhere clean and functional near their place of study. Families require space and room to develop their own style.

Also consider potential future changes to the area. If new transport links are due for developmentin the area, this could add value for commuters. If a new housing complex is approved by local planning authorities, this can have a positive impact on other local property values.

Choose your professionals carefully

Pick trustworthy accountants, lawyers, financiers and builders with a proven track record. By working with professionals you trust, you will have confidence that your interests are being served. With their backing, you will maximise your profits while sleeping easy in the knowledgethat you have reliable support that you can access when needed.

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