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15th March 2019

Investing in Lettings

If I had a penny for every time someone has asked me if buying a property to let is a sound investment, I would be a very rich man!

Greater demand from tenants, rents that should rise with inflation and the long horizon for interest rate rises have definitely helped bolster the attraction of the buy to let proposition with returns on savings at an all-time low.

If you prefer an investment that feels more tangible than stocks and shares, you are willing to tie your money up for a long period of time and you understand and accept the costs and time involved in owning and running a property then you should consider buy to let as a sound medium to long-term investment as it can generate an ongoing passive income.

Like any investment, buy-to-let comes with no guarantees, but for those who have faith in bricks and mortar, here are my top tips for success.

  1. Research the market on buy-to-let

If you are new to buy-to-let, what do you know about the market? Do you know the risks, as well as the benefits?

If you know someone who has invested in buy-to-let or let a property before, ask them about their experiences – warts and all. At Redbrik we offer expert advice and can assist you every step of the way on your buy to let journey.

  1. Do the maths on buy-to-let

Before you think about looking around properties sit down with a pen and paper and write down the cost of houses you are looking at and the rent you are likely to get.

Buy-to-let lenders typically want rent to cover 125 per cent of the mortgage repayments – often now 150 per cent – and most now demand 25 per cent deposits, or even larger, for rates considerably above residential mortgage deals.

Once you have the mortgage rate and likely rent sorted then you must be clinical in deciding whether your investment work out?

Don’t forget to factor in maintenance costs and what will happen if the property sits empty for a month or two?

These are all things to consider. Make sure you know how much the mortgage repayments will be and if it is a tracker allow for rates to rise.

  1. Consider how hands-on a landlord you want to be

Buying a property is only the first step. Will you rent it out yourself or get an agent to do so?

At Redbrik we offer a full property management service. Our expert Lettings team provide a concierge-style service, entirely tailored to you. We really do look after your property and the needs of your Tenant.

  1. Think about your target tenant

Instead of imagining whether you would like to live in your investment property, put yourself in the shoes of your target tenant.

Who are they and what do they want?

  • If they are students, it needs to be easy to clean and comfortable but not luxurious.
  • If they are young professionals, it should be modern and stylish but not overbearing.
  • If it is a family, they will have plenty of their own belongings and need a blank canvas.


At Redbrik we have always been about matching people to their perfect property so we can assist with this every step of the way. Our top-class database software allows us to utilise the information we hold to match over 11,000 applicants to homes accurately, with an average of 131 people contacted per property marketed by Redbrik.

  1. Don’t be greedy, go for rental yield

We have all read the stories about buy-to-let millionaires and their huge portfolios.

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To compare different property’s values, use their yield: that is annual rent received as a percentage of the purchase price.

For example, a property delivering £10,000 worth of rent that costs £200,000 has a 5% yield.

Rent should be the key return for buy-to-let.

Most buy-to-let mortgages are done on an interest-only basis, so the amount borrowed will not be paid off over time.

This is tax efficient, as you can offset mortgage payments against your tax bill.

However, whereas once you could offset your entire mortgage cost against tax that is now being eaten into and by 2020 you will get a maximum 20 per cent tax credit on your mortgage payments.

If you can get a rental return substantially over the mortgage payments, then once you have built up a good emergency fund, you can start saving or investing any extra cash.

  1. Choose a promising area to invest in property

Promising does not mean most expensive or cheapest. Promising means a place where people would like to live, and this can be for a variety of reasons.

Where has special appeal? Where has good transport? Where are the good schools for young families? Where do the students want to live?

You need to match the kind of property you can afford and want to buy with locations that people who would want to live in those homes would choose.

These questions might sound overly simplistic, but they are probably the most important aspect of a successful buy-to-let investment

In most cases people tend to invest in property close to where they live. On the plus side, they are likely to know this market better than anywhere else and can spot the kind of property and location that will do well.

 Locally I would recommend:


  • Take a look at properties on Chatsworth Road as well as Brampton and Hasland. Demand for good quality rental properties is always high here.



  • Properties in Meersbrook and the S8 postcode offers excellent capital appreciation and a great return on investment if you decide to sell.
  • City centre apartments are always a great investment option as they command consistently high rental fees and the require very little maintenance.
  • The S20 postcode area is popular with everyone from young professionals and families alike, which has created a high demand for rental accommodation.


 Buy to let investor case study

We were approached by a client who had inherited a three bedroom bungalow in Walton. Their wish was to let the property to provide a monthly income. The property required some improvement, including a new kitchen and bathroom

If the bungalow was refurbished (at a cost of say £15K) the rental income would have been around £700 PCM, however the sale price in its current condition was around £250,000. This would only provide a yield of 3.2%.

We advised the best option would be to sell the bungalow and use the money to buy a further two rental properties where the return would be higher.

The client took our advice, sold the bungalow for £253,000 and used this money to buy an apartment and a terrace house in Brampton.

We then let both properties and the combined rental income was £1150 PCM.

This increased the potential return to 5.5% which was a far better use of their asset to generate more income.

Our client was extremely happy and said they appreciated our accurate advice as it all worked exactly as we predicted it would.