How To Find The Best Areas For Buy-To-Let Properties In The UK

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Buy-to-let properties have long been a popular choice in the UK for investments, and these days, they continue to attract investors who are looking to generate both income and long-term capital growth. The latest Bank of England figures show there are more than £160.9 billion in buy-to-let mortgages in the UK right now, an increase even over the last quarter. A number like these prove that buy-to-let UK properties are just as popular as they’ve ever been. If you’re considering a buy-to-let arrangement, you may wonder how to find the best areas for these buy-to-let houses. Whether you’re looking for the cheapest place to buy property UK sellers have on the market or just the best places to buy a house UK sellers have on the market today, this quick guide can help you find it.

Why Are Buy-to-Let Properties So Popular?

Understanding where to purchase your first buy-to-let property may help to learn more about what’s driving the market itself. There are actually a number of reasons people choose to invest in buy-to-let properties. One is the fact that interest rates tend to be significantly lower on a buy-to-let investment than on others, so it’s a good way to make an investment even if you don’t have a lot of cash on hand. Another reason they tend to be such a popular way to invest, though, is the fact that there’s a strong demand for rental properties across the UK. House prices seem to be creeping up over the past few years, and affordable housing is quite limited. That means more people than ever are looking for a solid rental. Maybe the other reason, though, is that historically, there have been some associated tax benefits with buy-to-let properties like mortgage interest tax relief. While many were left asking “Is buy to let worth it” in 2022 after changes to those tax regulations meant these properties weren’t quite as investor-friendly as they once were, they do still make this one of the largest investment opportunities in the UK.

Finding the Best Buy to Let Properties in the UK

If this investment seems like a good one for you, how do you even begin to find the right properties to meet your needs?

Start by understanding more about the legal and regulatory environment for buy-to-let landlords. In the UK, buy-to-let properties come with many regulations you must meet, and if you don’t understand tenant rights and responsibilities going in, as well as your obligations as a landlord and any licensing requirements you must have for certain localities, you could really be in for a shock down the road. In fact, your legal bills could get quite expensive in the near future. Chat with a solicitor or do some research online to learn more about becoming a landlord before you purchase a property.

Next, decide who your target tenant might be. You need to know whom you hope to rent to before you can search for the right properties. This might be young, single professionals. It might be growing families with children. It might also be something like students. All of these target markets are incredibly needy right now, and they are all looking for something different in a property. Some of these groups offer the highest rental yields UK landlords have ever seen, but others offer a steady commitment to the property. If you’re not yet sure who your target tenant is, you’ll want to do a bit of digging there. Young 20-somethings tend to look for properties that cost more, but they rarely stick around long. Students are likely to stick around for some time, but they want properties in areas near universities, and they often want furnished properties. They tend to offer a fairly average rental yield UK landlords will enjoy but never get truly rich from. Families will stick around the longest, but they’ll want to be near parks and schools, and your property will suffer a bit of damage in the process, so expect to have some repairs when they move out. Fortunately, they can be incredibly steady tenants.

Then, begin some research to learn more about the best buy to let areas. Learn more about the areas where rental properties are in high demand and offer you a good yield. These are going to be areas with great transport links, areas that are near employment centers, and areas that are growing in population numbers. There are several ways to conduct this research. First, take a closer look at popular property portals like Zoopla and RightMove. Where are people search the most for properties? Then, look at where lots of properties are being sold like the Land Registry. Finally, if you have any contacts within the real estate world, you’ll want to talk to them more about where they seem to be moving the most properties these days.

Your next step is to begin reviewing property listings of buy-to-let properties for sale. Once you’ve nailed down the kinds of tenants you want and the areas where properties are more popular than ever, you can begin to review listings through online portals and estate agent websites to review exactly what current market prices are and what your potential rental yield might be so you can find the best places to buy to let. Keep in mind that this review may mean speaking to local property experts like investment specialists and mortgage brokers to identify some of the opportunities in the area. It may also mean you need to network with other investments either online or at property investment events so you can gain the insights you need most to get started.

How To Understand What Your Rental Yield Might Be

One of the key steps in finding the right buy-to-let property to meet your needs is to search for areas that have the best rent yields UK landlords experience. If you’re unfamiliar with rental yield, it’s the amount of income you’ll actually generate from the property as compared to the value of the property. High rental yields tend to come from low property prices and areas of high demand that also have low rates of vacancy. If you’re not quite sure how to calculate rental yield, it’s fairly simple. Just divide the property value by the annual rent, then multiply that by 100.

Here’s a quick example that may help you nail down the idea of rental yield UK landlords calculate before they buy. Imagine you have a property value of £250,000. Each year, it generates £15,000 of annual income. You’re getting a rental yield, then of six percent.

Many different things factor into rental yields. The location of your property is one, but so is the type of property you’re trying to rent. Houses tend to make more than flats. The local market can impact your yield as well. Fortunately, you don’t have to go it alone as you try to find the rental yield for a property you’re considering. Instead, there are several portals with rental yield calculators attached that will help you better examine the best rental yield UK landlords experience. Often estate agents can help you better understand those numbers, too, as can market reports from investment specialists and research firms that offer data to those looking to invest in the market.

What is a good rent yield UK landlords experience? You’ll want to look for something that offers you a yield between three and five percent. Anything in that range tends to be average. Anything above that tends to be considered fairly good. The best rental yields in the UK in 2022 were around 8 percent.

Don’t Overlook the Amenities

As you search for the ideal property to meet your needs, be sure to search for the amenities your target tenant might want. That can vary a bit based on their property, but there are several that are key to any tenant group. Easy access to public transport is one of the most important, as is shops, restaurants and nearby pubs. Additionally, most tenants are looking for outdoor space like a good back garden or at least a balcony in a flat. Additionally, access to parking is a key consideration for many tenant groups like families. This is particularly true in urban areas where parking tends to be at a premium. Additionally, tenants will want properties that are safe and include alarm systems, and those that have good broadband access. Finally, most tenants want basic appliances like a washing machine, a dishwasher, and an oven.

After You Find the Right Property, Think About Mortgages

Once you’ve found the right buy-to-let property to meet your needs, the next step will be to connect with the best buy-to-let mortgage that meets your needs. This process will involve some comparison shopping and some research on your part. You may be able to simplify things a bit if you work with a mortgage broker, but even if you choose not to work with a broker, you must at least familiarise yourself with the kinds of buy-to-let mortgages available in the market and the terms and conditions that are attached to each. As you compare the various products from lenders, you’ll want to pay close attention to the buy-to-let rates and fees associated with the mortgage. Remember, each one might have different arrangements or valuation fees involved, so you’ll want to calculate the overall cost of the mortgage over its term, as the one with the lowest interest rate may not be entirely cost-effective for your property. The cheapest buy-to-let mortgage may not always be the best option. While the cheapest buy-to-let mortgages might seem like a good deal upfront, they may not make sense when it comes to your investment in the long run. Instead, the best buy to let mortgage UK landlords as you obtain is the one that makes sense for the rental yield you can expect and your own budget.

In addition to identifying which property might be best for you, you may want to look into the eligibility criteria for each mortgage like the minimum income requirements for investors or any restrictions they might have on the number of properties you can own at a given time. Before you apply, make certain you meet those requirements. The best buy to let mortgages have several different requirements.

When you’re ready to apply for a buy-to-let mortgage, the best strategies include gathering the documents you’ll need for a lender. While what you must provide can depend a bit on the type of buy-to-let mortgage you want and the lender, in general, you can expect to provide a few different things before you get the best buy-to-let mortgages UK lenders have to offer. Proof of income is one of the most important. You need to provide evidence to the lender that you can actually repay the loan. That can usually take the form of recent pay slips or bank statements. Lenders will really be looking for the fact that you have enough income to cover the cost of your mortgage payments if the property is unoccupied for some time.

You’ll also need to provide some evidence that the property will offer you the rental income potential you think it will for the best buy-to-let mortgages. Often you can do that through the property details you provide as well as copies of the tenancy agreements if it is already tenanted.  Once you apply for the best BTL mortgage, you’ll have to have the property professionally valued to ensure it’s worth enough to lend on it. Additionally, you’ll need to provide a deposit of at least 25% to get a mortgage on this kind of property.

The best buy to let mortgage rates UK lenders offer right now . . .The average buy-to-let mortgage rate right now, though, is . . .Keep in mind that the best buy-to-let mortgage rates UK landlords find tend to come from brokers who specialise in working with investors, so it might be worth it to add someone like that to your team before you get started.

Consider The Risks, Then Decide Whether Buying to Let is Right for You

Finding the best places to buy to let in the UK is only part of the equation if you’re considering a property investment.  It’s not just about finding the cheapest areas to buy in the UK, either. You might find a place with high rental yields UK landlords are buying in continuously, but it may not work out well for you.  Similarly, you might find a perfect buy to let London tenants might love, but it may still not be the right property for you. Instead, the right buy-to-let property investment involves a close look at rental yields, your ideal tenant profile, and what’s right for your budget.

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