I have £200,000 sitting in my current account not doing much for me. I have been looking for an investment property in the UK, but have yet to find something suitable. Do you have any advice on upcoming areas where I can purchase a buy-to-let a property outright for this amount of money?
Islay Robinson, chief executive at Enness, says that for the best buy-to-let investment, you will need to buy a property that will rent easily, continually be in demand and increase in value.
With £200,000, he would buy one property. It would be as close to central London as possible, say in zones 2-3. A purchase price of £650,000 with a rental income of £1,780 a month would mean a mortgage of 75 per cent. Depending on your circumstances Clydesdale private bank offers a mortgage of £487,500. The 3.5 per cent interest rate would mean you would pay £1,421 per month on an interest-only mortgage. This would give a monthly profit of £360 per month. You would also need to speak to a good accountant here to ensure you don’t pay too much tax. These figures assume there are no voids and the property is let privately.
The deposit would be £162,500, stamp duty £22,500, plus valuation, legal fees and other fees. This would leave £10,000 as a buffer for voids, repairs and the other unexpected costs that may arise. Something always rears its head, from a tricky tenant to a broken boiler.
With this investment, I would expect healthy returns from the London housing market. An increase of 5 per cent a year would add £32,500 to the value of the property.