The introduction of assured shorthold tenancies in 1997, which made the rights of tenants and landlords more equal, created the buy-to-let market that exists today. Some say buy-to-let has forced up property prices but there is no doubt it has a part to play as first time buyers are getting older and younger people are renting. The whole point of buying-to-let is for its investment potential – both capital growth on the value of the property and the income it generates in rent. Buy-to-let lending is to support investment, not home ownership. It is important to note that lenders carry out post-completion checks in relation to scheme abuse to see who is residing at the property. There are risks like any investment.
- it will not normally be in your interest to realise, cancel or surrender any existing investments in order to purchase a property to let
- there could be difficulties with tenants who breach agreements impacting time and legal fees, as well as income
- periods of rental voids if the property is not tenanted (during redecoration or change of tenants)
- the higher the sum borrowed the more you are at risk of rent not covering your loans or expenses
- investing in a single property can result in a lack of diversity if you do not already have a good spread of existing investments.
The Financial Conduct Authority does not regulate Buy to Let mortgages