All of your buy-to-let questions answered

If you’re thinking of investing in property, you probably have a lot of questions you’d like answered. We’ve put together a short Q&A on some of the questions we get asked most frequently to help. All you need is ESPC!

Orlaith in newsWith our extremely hands on and knowledgeable lettings team based in our Edinburgh showroom so if you'd like any more advice or if you'd prefer to speak to someone one on about what type of property is right for you, please pop in and see us.

The property and my tenant(s)

Which area is best to buy in?

The best area(s) to purchase in are those where your target tenant market wish to rent in. We always recommend that you have an idea of your target market and factor this into your search. There are areas best suited to students such as Newington and Marchmont and areas best suited to professionals such as Stockbridge and The New Town. Edinburgh is a vibrant and popular city with a tenant market for most areas.

What type of tenant(s) should I look for?

Regardless of your target market, all tenants should be credit and reference checked and you should ensure the tenants can afford the rent and bills based on their income.

Is there a standard form of contract which I should use with my tenant(s)?

Most landlords opt for a short assured tenancy. However, there are changes coming to the Scottish Housing legislation so there will be changes to this lease in the near future. We do not know the exact nature of these changes yet but would recommend working closely with a good letting agent to confirm.

My finances

How much deposit do I need to secure a buy-to-let mortgage?

In order to obtain a buy-to-let mortgage, a deposit of at least 20% of the purchase price is required, although most providers will ask for a 25% deposit. There are also minimum income requirements to consider when obtaining this type of mortgage.

Which type of mortgage is most appropriate?

A buy-to-let mortgage tailored to your specific requirements is most appropriate. As the market increases in popularity, we are seeing more buy-to-let products becoming available with independent mortgage advisers well placed to find the best mortgage to suit individual circumstances.

How much rent should I charge?

The rent you can charge a tenant very much depends on the property itself. There is not a direct relationship between the purchase price of the property and the rent you can obtain. The rent is influenced by size, location, condition and how the property is marketed to potential tenants.

What fees will I have to pay during and after the purchase?

The costs related to the purchase will usually be whatever conveyancing fees and taxes are applicable. An ESPC solicitor firm will be able to provide you with a quote for the purchase costs. After the purchase, the main costs are those to get the property ready for rental and include; landlord safety certificates, any decoration required, insurance and registration.

How does taxation of profits from rent and sale of the property work?

Letting your property is a business and there are tax implications from the income made. If your tax exceeds a certain level, you will be obliged to pay tax on your profits. If you rental income is more than £2,500 (less allowable expenses) per annum and you do not already complete a tax return, then you need to register for self-assessment and your income will need to be reported on a tax return.

Landlord insurance

Do I need special insurances?

Yes, landlord insurance is required. A financial adviser will be able to give you more information on the different types of insurance available to you.

ESPC Lettings

Is a tenancy management service available to help me if I am working/living away from home?

Yes, ESPC Lettings offer a full management service which takes care of all aspects of the management process. Choosing how to manage your property is a big decision and with the frequent changes to the housing legislation, it is good practice to appoint an agent who will be up to date on these changes. Landlords are responsible not only for managing the tenancy with rents and maintenance priorities but also for staying abreast the changing legislation. We always recommend you list any questions you have about the rental process and ensure you get all of the answers before making a final decision.

If you’re still in the early stages of the process and would like some more general information call one of the team on 0131 253 2847 or email landlord@espc.com