Buy-to-Let Property Investment Guide 2021

Buy-to-let Guide 2021

2

Buy-to-let Guide 2021

A NOTE FROM THE CEO

I

t has long been my opinion that a diverse and healthy

property portfolio is the only pension you can really rely on.

Buy to let property is increasingly recognised as the most resilient asset class available to investors, 2020 proved this to be true once more. In strong economic times, capital growth and rental income are the spoils of well thought out and timely investments and in leaner and more unpredictable times these revenue streams can provide the essential income required to weather economic uncertainty.

....

3

Buy-to-let Guide 2021

T

here are many different types

diligent in their approach.

of real estate available to

investors from property funds to

That doesn’t mean to say you

renovation projects, retail and

should sit back and analyse

office space, there are a number

endlessly as windows of

of ways for individuals to try to

opportunity will arise and

profit from property.

pass you by - 2021 is certainly a time where

Residential property is a firm

investors have a access to

favourite for those looking to

deals we haven’t seen

build a strong, passive return.

available to the market for

Though it might be the most

many years.

predictable and perhaps the most vanilla of the asset classes

The relative predictability of

available, it is also fundamentally

the property market allows

the most in-demand.

investors to scale a portfolio and plan 5 or 10 years in

Although the timing is key with

advance. There’s an ability to

property investment, unlike other

plan ahead for when it is

investment options you don’t have

time to refinance in order to

to be an expert, constantly

buy more units.

watching the markets to be in the right place at the time.

Thirlmere Deacon are a team of investors who have their

4

Property markets move at a

own portfolios and can offer

somewhat slower pace than say

authentic advice. Sharing

the stock market for example,

their experience and

where decisions have to be made

knowledge to help investors

in minutes. Property investors can

build a successful portfolio

afford to be considered and

of buy to let properties.

Buy-to-let Guide 2021

Once you get to the position where your investments are buying you investments, that’s when it gets exciting.

Stuart Williams 5

Buy-to-let Guide 2021

6

Buy-to-let Guide 2021

Price Growth T

hroughout 2020 the

What’s ahead for 2021?

average UK house price

grew considerably, the

Forecasters have varying

numbers being driven by

opinions but the general

many who chose to relocate

consensus is that average

following the first national

prices will grow marginally by

lockdown and activity further

a few per cent, showing

increased by the temporary

steady growth.

stamp duty holiday.

There are areas of the UK As the year drew to a close

that are predicted to see

the Nationwide building

considerable growth over the

society reported that UK

next 5 years, such as the

house prices had grown by

North West region of England

7.5% in 2020, the highest

which Savills predict will see

growth rate for six years.

prices grow by as much as 27.3% by 2024.

The UK’s property market has again proven its resilience, a resilience that was doubted by many at the beginning of the pandemic.

....

7

Buy-to-let Guide 2021

Tax Changes C

hanges to taxation in 2020

in Stamp Duty Land Tax(SDLT).

included amendments to the

The reduction in rates means

rates of Capital Gains Tax and

that buyers only pay SDLT on

Mortgage interest tax relief.

the amount payable on a property over £500,000,

The changes to Capital Gains Tax

thought the 3% surcharge for

required landlords to declare their

investment properties remains

CGT liabilities quicker and other

in place.

amendments only applied to a limited number of landlords who

The reduction in rates of stamp

had previously lived in a property

duty was announced on 8th July

they rented out.

2020 and is now due to end on 30th June 2021.

As of April 2020 landlords were no longer able to deduct mortgage

With proper planning and

expenses from rental income and

appropriate structuring,

will instead receive tax credit

landlords can ensure they are in

amounting to 20% of the

the best strategical position

mortgage interest paid.

when investing – we recommend investors speak to

One surprise change that benefitted property purchasers in 2020 was the temporary reduction 8

specialist advisors.

Buy-to-let Guide 2021

9

Buy-to-let Guide 2021

10

Buy-to-let Guide 2021

Where to invest in 2021

11

Buy-to-let Guide 2021

E

ach year investors seek the next best place to invest,

the dynamics of each hotspot changing as improvements to infrastructure or redevelopment take place.

Based on several factors including plans for regeneration, ongoing development, local universities, economic growth and changes to the population, several areas stand out and should be considered for buy-to-let investment in 2021.

12

Buy-to-let Guide 2021

....

13

Buy-to-let Guide 2021

North West

Manchester

C

ontinuing to be a valid investment prospect,

Manchester is one of the most established locations in the UK to invest when looking outside of London.

Though prices have grown considerably over the last decade there is still much more growth to be seen, regeneration continues across the city including a £1.4 billion development on which work began in December 2020.

Not only is the economy growing, but employment figures are also impressive and rental prices are predicted to grow by 16.5% over the next 5 years.

14

Buy-to-let Guide 2021

....

15

Buy-to-let Guide 2021

16

Buy-to-let Guide 2021

Preston

Liverpool

T

L

he North West region of England is predicted to see

property price growth of 27.3% by

iverpool has seen impressive economic growth in recent

years and is expected to improve

2024, according to the latest

further as city-wide regeneration

forecast from global real estate

projects continue.

agent Savills.

Property prices are considerably With the impressive numbers

lower than neighbouring

expected to come to fruition,

Manchester, whilst in some areas

investors should seek to have

of the city rental yields are

some assets in this area of the

reaching double digits. Coupled

country as part of a

with the fact that 7 of the top 10

diverse portfolio.

postcodes in the country for capital appreciation are in

One area that is ripe for

Liverpool, this is a city that should

investment is Preston, a commuter

be on radar for all investors in

city just 27 miles from both

2021.

Manchester and Liverpool. Entry prices are low and yields high.

....

17

Buy-to-let Guide 2021

North East

Newcastle

A

forward-thinking city with a bright future

ahead, the universities and economy are largely focused and specialise in innovative areas, it is one of just six designated science cities in the UK. Investment is pouring into Newcastle as the economy grows, over 14,000 new jobs are forecast to be created over the next few years pushing demand for rented accommodation even higher.

The North East region as a whole is predicted to see property price growth of 21.7% over the next 4 years.

18

Buy-to-let Guide 2021

....

19

Buy-to-let Guide 2021

20

Buy-to-let Guide 2021

West Midlands Birmingham

S

et within the largest regional economy outside of London, Birmingham has a

strong demand for rental property, a growing and future-proof economy, five universities, one of the youngest populations in Europe and is home to several world-class businesses.

Transport connections in the area are seeing continued improvement and HS2 is in the pipeline. Being located in the middle of the country gives Birmingham a strategic advantage and allows residents to reach all other business hubs in the UK with relative ease.

The West Midlands region as a whole is forecast to see price growth of 21.7% over the next 4 years by Savills and rental price growth is predicted to be 15.9% according to Jones Lang LaSalle, a global real estate company.

21

Buy-to-let Guide 2021

How to achieve investment success in 2021 23

Buy-to-let Guide 2021

Strategize

T

aking a ‘hit and hope’ approach to property

investment is never wise. Set out your goals from the outset, this will help determine locations and property types that are best suited to achieve your ambitions.

What is your budget, will you get financing, what are the associated costs, ideal timeline?

All valid questions that you should be able to easily answer before looking for and buying a buy-to-let property.

24

Buy-to-let Guide 2021

....

25

Buy-to-let Guide 2021

26

Buy-to-let Guide 2021

Diversify

I

f there’s one tip that has bode the most successful property

investors amongst us well it is to diversify your portfolio.

One area might be showing all the signs of offering excellent potential for capital growth and have a buoyant rental market but it is likely there are other areas to consider that have equally as much merit as an investment prospect.

The saying ‘don’t put all your eggs in one basket’ most definitely applies when building a property portfolio.

....

27

Buy-to-let Guide 2021

Have a long term outlook

T

his point is especially true in 2021 as the markets

adjust to many factors including the mass number of relocations and changing tenant demands seen in 2020.

Property investment is not a get rich quick scheme, having a long term outlook when investing will offer an investor the ability to plan effectively.

Set goals for in 5,10 and 15 years so that you can scale your portfolio successfully.

28

Buy-to-let Guide 2021

29

Buy-to-let Guide 2021

30

Buy-to-let Guide 2021

Mortgage market update 31

Buy-to-let Guide 2021

A

pril 1st 2021 marks 5 years since the stamp duty

surcharge was introduced. Back in 2016 thousands of landlords chose to take out five year fixed rate mortgages in order to grow their portfolios prior to those surcharges. As this anniversary approaches and landlords reach the end of their mortgage terms, it is likely the majority will be looking to refinance and release equity so not only will the demand for mortgages remain high, there is likely to be a surge of landlords looking to free up funds and expand their portfolios.

Finding the perfect buy to let mortgage product for your investment can seriously impact your margins and overall success as an investor.

32

Buy-to-let Guide 2021

33

Buy-to-let Guide 2021

34

Buy-to-let Guide 2021

Introducing VIBE Finance 35

Buy-to-let Guide 2021

VIBE

Finance have

know our investor clients are in

been working

good hands.

with Thirlmere Deacon for some time and are a specialist finance

From first-time investors,

brokerage firm, meaning they

investors with no regular income,

only deal with investment

UK Ex-Pats and Foreign Nationals,

mortgages rather than owner

we’ve seen them assist investors

occupier mortgages. Their client

from varying backgrounds.

base consists of property investors and developer buying or

Finding a good mortgage broker

refinancing residential and

can have a huge impact on your

commercial properties.

journey as a property investor. As investors ourselves we recognise

With a team of experienced

the importance of having an

brokers who come from the

effective team in place when

Banking sector where they have

buying a property, owning

sold and underwritten these deals

investments and when scaling

for the banks for many years we

your portfolio.

36

Buy-to-let Guide 2021

....

37

Buy-to-let Guide 2021

The typical VIBE mortgage process looks like this: 38

Buy-to-let Guide 2021

Broker makes initial contact

Client agrees to terms and

and issues mortgage terms

provides initial VIBE Forms

Broker passed over to VIBE

VIBE Apply for a Decision in

Case Managers who carry

Principle from the Lender

out internal checks

Client pays the application

VIBE submit a Full

and valuations fees

Application

Lender request any extra

Valuation is instructed by

documentation that is

the lender or VIBE

needed

Solicitors are instructed

Mortgage Offer is issued

Legal enquiries go back

Solicitors request funds

and forth to ensure that

from the lender

the title is clear

If you’d like to explore finance options, please get in touch:

Completion of the purchase

0203 950 7939 info@thirlmeredeacon.com

39

Buy-to-let Guide 2021

40

Buy-to-let Guide 2021

Finding tenants and managing your property 41

Buy-to-let Guide 2021

S

o you’ve bought a buy-to-let

ensure property remains in

property and you now need to

liveable condition.

find tenants, where do you begin?

One sure way to ensure you’re on Gone are the days of placing an

top of rules and regulations is to

ad in a newspaper or landlords

employ a professional

listing homes directly with

management company to take

online platforms.

care of your property.

Tenants now have a clear

It might seem like a money-saving

preference for renting a property

exercise to attempt to find a

via a reputable letting agency

tenant and manage a property

rather than directly with the

yourself but unless you have

landlord and will often pay an

experience in the industry you are

increased rental figure for a

likely to end up in hot water and

property that is

could suffer financially as a result.

professionally managed.

We recommend all landlords With professional agencies

consider a professional letting and

involved that answer to governing

management company to find

bodies and follow strict

tenants and manage the property

guidelines, both parties can rest

on their behalf.

assured they are protected.

Landlords must abide by certain laws and have regular maintenance checks carried out to

42

Buy-to-let Guide 2021

43

Buy-to-let Guide 2021

44

Buy-to-let Guide 2021

How to find the perfect tenant

F

rom the moment an investor

Having easy access to key local

begins searching for a buy-to-

business hubs or commuter

let property they should keep in

connections will make a property

mind the type of tenant they hope

all the more appealing to

the property will appeal to.

professional tenants.

Knowing their target market will

Convenience is also important to

enable an investor to select a far

busy professionals, a modern

more suitable property that

property where everything is in

appeals to the ideal tenant for

pristine condition will assist a

many years to come.

landlord seeking the perfect tenant.

Location plays a key part in attracting the perfect tenant.

45

Buy-to-let Guide 2021

In summary 46

Buy-to-let Guide 2021

T

he past few years have seen the UK property market

successfully overcome many hurdles and prove it is one of the most resilient markets to invest.

The fact remains that people will always require a place to live regardless of what is happening in the world.

Investors with a long term view who diversify their portfolios are likely to see the greatest success over the coming years. With some regions of the UK predicted to see almost 30% price growth over the next 5 years there are many exciting opportunities to consider.

47

Thirlmere Deacon London info@thirlmeredeacon.com + 44 (0) 2039507939 Lansdowne House, Berkeley Square, Mayfair, London, W1J 6ER

Thirlmere Deacon Dubai dubai@thirlmeredeacon.com +971 (0) 4 818 7277 Floor 30, Oberoi Business Centre, Business Bay, Dubai, United Arab Emirates