The UK real estate market, while being unpredictable, has proven to be a somewhat smart investment in the long run. The buy to let industry has grown massively over the years.
With population increase and rising house prices, it is projected that 1 out of 4 people will live in private rented housing within 5 years.
Buy-to-let is therefore a highly lucrative investment prospect.
Buy to let is investing in a property that has an expected capital growth through tenant rental revenues covering mortgage costs and other property expenses.
This post aims to explore Brighton ‘s current rental market and how to start up your business.
Why Invest in Brighton?
When choosing where and how to purchase your buy-to-let house, it is important to choose a widely known location, with a big population of professional renters and a growing demand that you can depend on.
Brighton & Hove is conveniently positioned between the South Downs and the Sea, making the location highly popular with almost every population group.
It got all the best city infrastructure, yet its vibe is relaxed and perhaps even a little eccentric, too.
It’s near enough to London for those who work and still want to visit London now and then.
With exceptional transport links to London, Brighton is seeing plenty of public transport commuters with London paying salaries, but prefer to live in Brighton, by the sea.
Although traditionally considered a city of young artistic people, Brighton has also been listed as one of the top business cities in the United Kingdom.
The economy keeps expanding and is valued at £ 7 billion.
Its reputation as a vibrant, multicultural city draws a lot of visitors. This means that there are massive tourism and traveler market that drives the need for accommodation. Brighton is among the top ten travel destinations with about 490,000 visitors each year.
This positive public image also means a large number of long-standing renters. Young adults and families travel to Brighton and end up living in rented housing for a longer period. Long-term renters also view the rental property as their homes and take good care of them, meaning your investment property is secure.
Brighton is a major student hub as well. The University of Brighton has about 21,000 students and three Brighton campuses and the other in Eastbourne. The University of Sussex now has 20,000 students.
Yet, Brighton is regarded as a tricky place for students to seek housing, so there’s plenty of potential for student landlords.
The popular areas for Brighton student accommodation include Lewes Road, Poets Corner, Hanover, Moulsecoomb, Coldean, Kemptown, and Bevendean.
The latest figures also show that Brighton and Hove have the fastest-growing rents in the UK. Soaring rental rates and rising property values will significantly raise your investment’s return. And, when you eventually decide to sell your buy-to-let property investment, Brighton has demonstrated outstanding capital growth in the last 10 years.
This is both positive and bad news for property owners. Great news, as the market for property and the rent that you will receive, can be massive. It’s negative in some ways because the property in Brighton is pricey. However, for clever investors, there are ways to make good deals.
Ways to improve the financial viability of buy-to-let properties:
Incorporate any kind of equity
When you have a capital, putting cash equity on a property to reduce the loan-to-value ratio at under 70% would significantly increase affordability.
Establish a limited company
Starting up a limited company to purchase a property is a completely legal means of preventing a cut in tax relief from 45% to 20%, however, there are both pros and cons.
Pros involve potential tax-free investment returns from property assets, money can be taken from the limited company towards private funds and no income tax on residual profits, thereby opening up additional capital for re-investment.
Cons comprise higher mortgage rates and taking in extra operating expenses, such as loan payments and legal costs.
Feel safe with a long-term mortgage agreement
Five-year fixed mortgages or long-term mortgages continue to be more costly than two-year contract options but are not subject to stress testing from the Bank of England.
As long as you pass the financial capability on a long-term basis, it’s a much easier and simplified operation.
Look for other options
If the profit margin on a current buy-to-let property is simply not worth your time, sell it and invest the money in a lesser value property but in a booming housing market where demand is high and development is stable to optimize your profits.