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is buy to let still worth it in 2022?
Headlines in recent months have been flooded with news of a buoyant start to 2022 in the buy-to-let market. The North East has been hailed as the current hot spot in many articles like this one. Before you start browsing properties for sale around the UK, we want to explore whether buying to let is still worth it in 2022. 
You may be interested in investing and prefer the idea of buying property, rather than stocks and shares. As with any investment, buy-to-let comes with unique risks and challenges and we believe that it is important to be informed before making any decisions. 
What is buy-to-let? 
Buy-to-let is the purchase of a property that you do not plan to live in, and which you rent out to others. The aim is for the rental income to help you to reach your financial goals. Over time the hope is that the value of the property, be it a house or a flat, appreciates and that your capital grows. Probably one of most deliberated topics in terms of costs to landlords in recent years, is around tax. 
What has changed for landlords? 
In 2016, stamp duty tax went up by 3% for buyers of a second property in England. In Scotland the figure is 4% for those buying additional properties. As with any costs, you have to factor this in and we like this handy calculator, which can help you to do so. There have also been changes to capital gains tax rates, which you can keep up to date with here. You can find commentary on the benefits of buying your property through a limited company, which is something that it would be good to talk through with an independent tax adviser. Not a change, but a consideration about you as a landlord. Are you planning to be on call and do you or your contacts have the skills to fix any maintenance issues? Or are you envisaging the employment of a lettings agent to take care of any niggles for you? If you are looking for the property to be managed by an agency, then you can shop around to understand the fees and what you get for them. 
What are yields? 
Of course, along with all of your responsibilities and costs as a landlord, you will be projecting how much money you will make. Your rental yield is the value of the rent that you expect to the make in a year. Expressed as a percentage, rental yield is calculated by dividing the annual rental income by your initial property purchase price. You should also deduct from that your fixed costs such as interest on any loan, management fees and maintenance repairs. When you research the area where you wish to purchase property, you can compare potential yields and the pros and cons of different strategies. For example, do you want to invest in a university town where there will always be a market for your property and the turnover will be higher, as students move on? Versus somewhere with a longer term tenant that ticks over without much input each year. 
An example of how yields vary by region: 
Yield Generation  
North East 
East Midlands  
East of England 
North West 
South West 
West Midlands 
South East 
Source: Q4 2021 yields from Paragon Banking PRS Trends Report 
The Rosewater Group's Take... 
The Rosewater Group was built by Paul West who has over 15 years experience in the UK lettings market. We help people all over the country who are looking to buy or sell a letting agency. As long as you do your research and go in with your eyes open, there is no reason why you should not consider a buy-to-let as an investment opportunity. There are risks with any investment (as investors in technology stocks will currently tell you) and if you obtain independent financial advice then that is the first step. Here are our other initial tips if you are thinking about buying to let, 
Get your finances in order and choose a financial adviser 
Talk to a mortgage broker so that you are ready to get an offer in principle 
Know your areas, research current rental prices and calculate your anticipated yield before making any purchases 
Our belief is that although things are definitely more challenging for buy-to-let landlords than has been the case in the past, there are still likely to be long term advantages for landlords who wish to have a balance to their investment portfolio?  
The increasing burden of regulation might lead to a long term reduction in the proportion of landlords who self-manage so the net effect on letting agents might not be as bad as some people fear. Good quality, well run letting agents are likely to continue to be in demand for those companies wishing to expand. If you would like to advice on buying or selling a letting agency then click the button below to book a consultation. Our team will be happy to talk to you.  
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