Everything all homeowners need to know to turn buy-to-rent properties into a source of income
The buy2let store reviews investing in residential properties as one of the best sources of regular income. Many people prefer to invest in the UK rent-to-own property market rather than risk their money investing in the equity market.
This move is generally worth it for buyers as they make a certain amount of money / income on a monthly basis. But the amount of money you receive is limited and very small. Therefore, you probably don’t like this fact. In such a situation, you would like to find a new way to turn your London property to buy to rent for sale into a money maker.
In addition to this, as a buyer, you will also need to know the following points in detail:
• Best practices for homeowners / investors to use their income to overcome the new buy-to-rent rules
• How landlords can avoid the “hidden mansion tax” implications that are likely to affect rent-to-own investors.
• The process of converting properties for sale for rent into a short-term holiday stay for tourists.
• The possible consequences of the “hidden mansion tax” and the conversion of a rental property into a short-term vacation rental.
Honestly, it will not be easy to talk about these four points in a single article. That is why we have decided to launch a series of articles to help you turn your purchase-to-rent residential property into a source of income.
Let’s start with the discussion on the first point below:
What are the best practices for owners / investors to use their income to overcome the new rules of buying to rent?
Now the Bank of England has introduced strict rules on purchase-to-rent loans. Real estate investment agents in London believe that these rules are to help homeowners who own multiple properties. These new rental purchase loan rules will help such homeowners use their salary, investment income and pension income to obtain a mortgage to purchase investment property in London.
All credit goes to the Bank of England’s PRA (Prudential Regulation Authority). Homeowners who own at least four or more purchase properties to rent will now have to comply with these new rules. This process initiated by the Bank of England is known as the affordability test.
• Real estate investment agents in London highly recommend to homeowners. Lenders or lenders to see how this affordability test really works.
• Private lenders and credit institutions will now have to take a closer look at the affordability level of investors applying for a mortgage. In addition, it will also be mandatory that they evaluate the interest coverage ratios in detail.
• Some banks have started using a system called “top slicing”. This is good news for homeowners who are ready to buy low-yield, high-value investment properties in London. It is a good way for investors to use EPI (external personal income) to make up for any shortfall.
Now here are some very important questions:
• Are the best slicing deals available everywhere in England / UK?
• Which lenders are using Top Slicing while doing their affordability calculations?
• How did private lenders or other lenders react to the changes in the PRA?
• What will be the purchase criteria to rent for the owners?
• Will the choice of owners be reduced?
• Which are the lenders that do not accept portfolio lender applications?