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Real Estate Information |
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Buy to Let Property Investment
In recent years buy to let has been a popular way of investing in residential property. Stock markets are out of favour with many investors who have seen the values of their portfolios, endowment policies and pension funds shrink, whereas property has generally continued to rise in value. Interest rates are at historically low levels and mortgage finance is readily available on competitive terms from major banks and building societies. This brings property investment within the means of more investors than ever before. In these notes we will take the example of a foreign domiciled person, a non-resident of the United Kingdom, buying a property in London with the benefit of loan finance, but the general principles can apply to many other markets. Buying to let pre-supposes that there is a tenant willing to rent the premises and provide the cash flow, which will service the borrowing and is only one of the factors, which need to be taken into account before entering into a commitment. These can be summarised under three main headings. The Property It has been said that the three most important matters to take into account when buying property are location, location and location and this maxim holds just as true for investment property, ? It should be situate in an area where tenants are looking to rent ? It should be attractive to tenants and be, for example, an apartment, penthouse or a period or modern house. Listed buildings or converted churches may have their appeal but it is to a narrower market ? It should be in, or brought into, good condition. ? It should be in an area where property is in demand, making a resale easier in the future. The Finance For the right property mortgages are available both onshore and offshore, at competitive rates, from many of the major lending institutions and the terms can be negotiated. It is possible to obtain a loan on a repayment or interest only basis and for an agreed period. Whilst higher percentages are sometimes available we suggest not borrowing more than say 70% of valuation to avoid a cash flow crisis if interest rates rise and to allow for periods when the property is vacant. The lender will also be looking for a monthly rent of the order of 130% of the monthly repayment. Taxation In the United Kingdom the investor will need to take into account the three main direct taxes, ? Income tax, which is payable on rents. Loan interest and the costs of repairs and maintenance are deductible ? Capital gains tax, which is not payable by a non- resident on the sale of a property held only as an investment and not as part of a trade or business. ? Inheritance tax, which is charged at 40% on the amount by which the aggregate value of chargeable assets exceeds a threshold, currently £263,000. Exposure to taxation can be limited if, instead of the property being registered in the name of the investor, the title is held in the name of a company formed in a tax free area, the British Virgin Islands for example. This subject is covered below. There is of course one other important factor in this equation, The Tenant It is important to take up references on a tenant both to ensure that he can pay the rent and that the occupants are likely to keep the premises in good condition. Amongst preferred tenants are professionals such as bankers, stockbrokers, financiers, solicitors etc. many of whom require a property only when they are in the city and who have no interest in purchasing. Furnished or Unfurnished This is a decision to be taken in the light of the objectives of the investor. If he is looking for a long- term tenant, unfurnished may be the answer. The typical tenant described above may prefer a furnished property however. Structuring the investment As mentioned above, in order to reduce exposure to taxation, the property should be registered in the name of an offshore company, the shares in which are owned by the investor. By this means our foreign domiciled, non-U.K. resident investor can, ? Eliminate completely any liability to inheritance tax ? If each property is held within a separate company, avoid the risk that on a future sale the proceeds will be treated and taxed as trading income. It is very important that the company itself be managed and controlled from a non-taxing jurisdiction and this is where the Chesterfield Group can help. Our services include, ? Forming the company in a suitable location ? Acting as Directors and Secretary ? Maintaining the Registers and filing the returns required by law ? Keeping the accounting records and preparing annual financial statements ? Filing the tax returns ? Liasing with solicitors, property managers etc. as required The Chesterfield Group provides a full range of trustee, and corporate advisory, formation and management services and invites enquiries. More particulars can be found on our web-site http://www.chesterfield-management.comRef=CH1EZ
MORE RESOURCES: Russian Demand for U.S. Real Estate Surges 78.5% The Moscow Times What renters really want | Real Estate Newsletter Inquirer.com NYC Real-Estate Execs Throw Money Behind Adams to Counter Rise of Mamdani The Wall Street Journal WA real estate firm fired woman for reporting harassment, lawsuit says The Seattle Times Commercial real estate update: As big box brands buckle, the three A's can save the day Tallahassee Democrat Real estate investors are purchasing more U.S. homes as high prices lock out would-be buyers CBS News Livvy Dunne Tried to Buy Babe Ruth’s Former Apartment. An N.Y.C. Co-op Board Said ‘No’. The New York Times A tale of two Floridas: Real estate industry torn over DeSantis' push to eliminate property taxes Fox Business Luxury Real Estate Company Unveils ‘Flathead Lake Club’ Proposal in Lakeside at First Public Hearing Flathead Beacon Banner Real Estate Group breaks ground on The Faywell multifamily community in downtown Wheaton Chicago Agent Magazine ‘It’s all looking great’ for the M’s of M2 Property Group in Texas Real Estate News by RealEstateNews.com Delaware journalist goes beyond real estate data to tell stories about affordable housing Yahoo News DDN: Judgment filed in Wright State’s real estate arm case Wright State University ‘Ongoing stagnation’: Real estate fundraising stays muted in H1 Private Equity Real Estate | PERE News of public record: Coshocton County real estate transfers Coshocton Tribune Milestone Real Estate owner realizes dream with Downtown Fresno office thebusinessjournal.com The Link Between U.S. Immigration Changes and Real Estate Opportunities in the Philippines Asian Journal News Top Manitowoc real estate sale was $2.2 million for week of June 30-July 2 Herald Times Reporter Lancaster County hits new real estate record LancasterOnline Berkshire region real estate sales – July 11, 2025 The Berkshire Edge Hybrid ‘buyer agent’ blends AI with the human touch Real Estate News by RealEstateNews.com Lee & James Real Estate Photography Launches Back-to-School Special for Portland Area Realtors Akron Beacon Journal Real Estate: June 2025 Coronado Market Update Coronado Times Amazon has profoundly changed Polk's industrial market The Business Journals Staten Island real estate 2025: Housing inventory plummets as prices climb, report says - SILive.com Real Estate Minute – 07-10-2025 Texomashomepage.com Current Real Estate Roundup - July 10, 2025 Nantucket Current ARX Launches First PPE Brand Designed Specifically for Women, Redefining Safety on the Jobsite Boston Real Estate Times As Sovereign Debt Loses Its Luster, Economist Sees Investors Turning to Real Estate and Other Hard Assets Urban Land Magazine $400 Million Family Lawsuit Involving Prominent Fullerton Real Estate Figures Part 2 Fullerton Observer Video tour of a waterfront Jupiter Island estate that sold in June for $18 million Treasure Coast News What's the most expensive property sold in Rhode Island? July 11 real estate transactions The Providence Journal Fort Greene rental building trades for nearly $210 million Crain's New York Business Is private real estate underestimating risk for US life sciences? Private Equity Real Estate | PERE Leading Index for Commercial Real Estate Increased 7% in June Calculated Risk Signs of Recovery: Boston Lab Market Shows Momentum in Q2: JLL Report Boston Real Estate Times Department of Taxation and Finance dos.ny.gov Guest view: The renaissance of necessity retail real estate IPE Real Assets Real Estate Roundup: YKK Sells Anaheim Building for $39 Million Orange County Business Journal Mom, I’m Going Into Real Estate The Jewish Link Providence Hill Real Estate owners buy office building near Tuckahoe HQ Richmond BizSense As Californians Fought Corporate Landlords, YIMBY Action Partied with Big Real Estate’s Cash CityWatch LA Real estate boss targeted in San Francisco with smear campaign The San Francisco Standard CNBC is expanding its real estate coverage Talking Biz News Real estate CEO warns of growing ‘exodus’ as people have ‘given up’ on California — but where are they going? Yahoo Finance Where are home prices falling most in America? This SWFL community made top of the list Naples Daily News Confusing housing stats & real estate nerds Sacramento Appraisal Blog Report: 7 of 12 Luzerne County school districts increased real estate taxes for 2025-26 The Sunday Dispatch Report: Leasing lags, but Dayton bets big on defense and development The Business Journals 10 of the Best REITs to Buy For 2025 | Investing US News Money Fetner, MCB Real Estate, Farallon Capital Buy 240 Willoughby Street for $210M Commercial Observer How Egypt's Capital is Becoming the Epicenter of Real Estate Transformation in the Region Entrepreneur |
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