Which property strategy may be suitable for you?

If you are looking to join the estimated 2.7m landlords in the UK investing in property, it may be useful to consider which buy-to-let strategy is most suitable for you. We hope the following guide will help you in your buy-to-let property venture.

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Our Rent Guarantee Insurance policy protects your income stream if your tenants fail to pay their rent, as well as providing you with legal expenses cover to help you pursue those rent arrears*.

What is a buy-to-let strategy?

When you invest in a buy-to-let (BTL) property, you are buying a property specifically to rent out to tenants. They pay you rent, and you should, after expenses, still make a monthly income from that rent. Giving you extra monthly income.

The property will hopefully also increase in value, meaning that you could expect long-term capital gains**.

Defining your BTL strategy can help you decide on the types of property to invest in and the types of tenants you want to attract.

What are the different types of buy-to-let?

There can be many ways to invest in property, including but not limited to:

Residential properties

Having a single let – this is a single property, a house or flat, that you rent to a family, couple, single person or group of friends.

Investing in a ‘House in Multiple Occupation’ (HMO) – HMO’s are typically properties that have several tenants from different households sharing some facilities. A student house is a great example of this.

Portfolio property investment – this is where you own four or more mortgaged properties – for example, a block of flats or several different homes.

Commercial properties

Commercial – this is where you rent out a commercial property (the benefits tend to be longer-term agreements)

Commercial to residential development opportunities – for example, you buy a warehouse and convert it into flats.

Other property investment strategies

There are also other strategies such as Serviced Accommodation (Holiday lets or corporate lets) and “flipping” properties (where you buy a property in need of TLC, renovate it and then sell it for a profit).

Rent Guarantee Insurance

Our Rent Guarantee Insurance protects landlords against the loss of rental income should a tenant fail to pay their rent whilst still living in the property. It will also cover some of the costs that landlords will incur when taking legal action against a tenant.

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Which buy to let investment strategy is appropriate for you?

We’ve outlined several property investment strategies above. Choosing the most suitable option for you is a matter of personal choice and circumstance.

Considerations may include how much money you have to invest, whether you want to be hands-on or use a managing agent, whether you have renovation and building skills (if you are looking to ‘flip’ a property for example), and your attitude to risk.

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*Claim limits apply. These will be defined within your policy documentation.

** The value of property can go down as well as up
and capital property growth is not guaranteed. Historically, however, property
prices tend to rise, with recent research
showing that across the UK as a whole, house prices have increased at an average rate of 4.3% each year since 2011.

www.gov.uk/private-renting/houses-in-multiple-occupation

www.onlinemortgageadvisor.co.uk/buy-to-let-mortgages/buy-to-let-portfolio-mortgages-uk/

www.buyassociation.co.uk/2020/12/18/the-number-of-buy-to-let-landlords-reaches-an-all-time-high