Your guide to BUY TO LET INVESTMENT

One of the best financial resources is property. If you’ve made money buying and selling one or more houses in the past, you might be tempted to put some more money into bricks and mortar. But in this day and age, are buy to let investments a good idea? We look at the good, the bad and the ugly sides of buy to let investments and see if they work for you.

    

OUR EXPERTISE

ARE BUY TO LET INVESTMENTS A GOOD IDEA?

It’s true that many people have made a lot of money through buy to let investments over the years. There is a massive rental market in the UK, particularly among the upwardly mobile younger generation, who are either unable to get on the property ladder, or prefer the flexibility and choice that renting allows.

If you’re willing to put in some groundwork, buying cheap and doing up a property can bring in a greater profit – you just need to invest a little bit of extra time and money initially.

And when property prices go up, your investment can rise dramatically. If you’re willing to give it a few years, you could make a tidy profit on the selling price, as well as scoop up monthly rental yields.

THE RISKS OF BUY TO LET INVESTMENTS

The government have squeezed buy to let landlords over the past few years. In a bid to increase property ownership amongst young people, laws and regulations have been altered to minimise the benefits of renting out property. The tax benefit of being able to set all your mortgage interest against rental income before calculating the tax due is gradually being abated over the next few years.

This means higher tax bills which in turn makes being a landlord less profitable. This is compounded by the base rate increasing and mortgage rates going up, albeit slowly, over the next couple of years.

It’s not all bad news, however, and you can still make money on property, but it’s well worth seeing a tax advisor and mapping out your tax liabilities before you take the plunge into buy to let investments.

“HiP could solve the UK housing crisis”

Peter Bill,

Author of Planet Property

"It’s a game changer, and a very exciting one."

Sophie Eastwood,

Global board director of Young Entrepreneurs in Property (YEP) and founder of specialist property PR consultancy, Holistic

HiP as buy-to-let alternative

HIP IS THROWING OUT A LIFELINE TO BUY TO LET INVESTMENT LANDLORDS

So, we’ve seen that while it’s still possible to turn a decent profit on a buy to let investment, it’s not as easy as it once was. But help is at hand.

WITH HIP, YOU CAN ACCESS THE EQUITY TIED UP IN YOUR HOME

HiP helps people who want to buy a second or multiple homes for investment. Gathering together a sufficient enough deposit is difficult, but we allow you to access your property wealth in your own home, so you can draw down on your equity easily and quickly. You can then use this as a downpayment on another building.

Trade your equity

Open your house onto the HiP exchange and trade your equity with property investors. This could allow you to buy a property that traditional lenders would deem out of your price range.

Access finance from new investors

Team up with our investors and you can minimise the risk of the investment, allowing you to part-own a house, or multiple houses, across the board. It’s exciting, it’s revolutionary, and it’s transforming the way landlords operate their properties across the UK.

HOW YOU BENEFIT WITH HIP

HiP is the NEW Way
to finance property

HiP Property: Our Aims

Reinvent the way you look at property investment

HiP is hugely beneficial to property owners, changing the way we can use bricks and mortar into something with far more fluidity than ever before. It is a debt and equity exchange, with investors all over the world interested in putting their money into property.

Turn Your Property Into a Bank Account

For you, this means a democratised property market; withdraw money from equity without moving, borrowing or losing ownership, use your equity to cover your monthly mortgage repayments, or trade your equity against your mortgage.

Flexibly in the high-yield property markets without limits

We allow you to do all this, and much more, without the penalties, costs and charges that a traditional lender would impose. Whatever your property investment or finance needs may be, HiP is on hand to help you take your next step.

HiP is regulated by the FCA

HiP UK will be regulated by the FCA*

And have an agreed licence for trading in the UK and Europe. *As we go live these permissions are being reviewed.

HiP is based in London

HiP UK is based in London.

HiP's 20+ staff operate from Camden, London. With registered address in Bristol.

HiP is award winning

HiP is award winning

We have won an awards and been shortlisted for more. We came second in the worldwide PropTech Innovation Awards and as Bronze in the Digital Impact award 2017 for “Best use of digital by sector”.

Register your interest

Just fill out the form on this page now, and you’ll be the first to find out about HiP, which we are busy creating. We can’t wait for you to join the property revolution.

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Frequently Asked Questions

WHAT IS THE LAW AROUND UK BUY-TO-LET MORTGAGES?

It’s well worth finding out about the rules surrounding buy-to- lets before you make the decision to apply. Borrowers are subject to more stringent ‘stress tests’ on their buy to let mortgage applications. According to the Bank of England, this is in a bid to reduce irresponsible lending. Lenders will review your entire portfolio when making a decision on one mortgage application. This has caused problems with those landlords who may have one or two properties underperforming, profit-wise. Even if the rest of your portfolio is more than making up for this small shortfall, it could be detrimental to your mortgage application.

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CAN YOU LET A PROPERTY IN THE UK WITHOUT A BUY TO LET MORTGAGE? WILL THE BANK FIND OUT?

If you own a property and rent it out, it is advised that you inform your mortgage lender as soon as possible about this change in circumstances.
Renting out your property on a standard mortgage will be infringement of the legal conditions of your contract, and you could face severe consequences.
Since 2013, banks and lenders have been chasing ‘accidental landlords’ and checking any properties which have been advertised on the rental market without their consent.
Letting your lender know about your wish to let to a third party is easily arranges, and will require you to obtain a ‘consent for lease’ document from your bank.

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CAN I GET A BUY-TO-LET MORTGAGE WHILE I HAVE BAD CREDIT?

They will usually demand a larger deposit and potentially higher rates. It is usually easier to obtain a buy to let mortgage with a less than gleaming credit score than a standard mortgage as you will be covering the mortgage repayments with the rental yield.
However, HiP allows borrowers with bad credit to get on to the buy-to- let ladder far more easily than most traditional lenders.

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How does a buy-to-let mortgage work and are they good?

A buy to let mortgage traditionally works by calculating the rental yield of a property to see if its workable with the mortgage repayments. Once the agreement has been worked out, you’ll pay a deposit to secure the mortgage. During this time, you will find tenants that can fill the property, ideally credit check them and get them to sign a tenancy agreement. They will then cover the cost of the mortgage repayments each month. To make it worthwhile, there should be extra, normally 25% extra, for you to use as profit or invest back into the house on any repairs.

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In the UK, if I get a mortgage, how long do I have to live in the property until I can rent it out?

Depending on the terms and conditions of the mortgage, you can rent the house out at any time. However, some lenders will refuse point blank to change a particular mortgage deal into a buy-to- let, so it is important to read the small print and discuss the possibilities when you take out a standard mortgage.

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Can I buy a property on buy to let and rent it to myself (UK)?

Depending on the terms and conditions of the mortgage, you can rent the house out at any time. However, some lenders will refuse point blank to change a particular mortgage deal into a buy-to- let, so it is important to read the small print and discuss the possibilities when you take out a standard mortgage.

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Is it better to get an interest only or repayment mortgage for a buy to let property?

Most landlords will choose an interest only mortgage over a repayment mortgage for their buy to lets.
The main reason for this is that landlords invariably see their properties as long term investments.
Interest-only mortgages are also flexible and tax-efficient – even though the tax rules on buy to lets is changing.

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The tax regulations around buy-to-let mortgages in the UK changed last year. Is it still profitable to do buy-to-let?

Profound changes to the way buy to let mortgages work have dramatically altered the livelihoods of a lot of property landlords. In 2017, changes to the law made it no longer possible for higher rate taxpayers to offset all their mortgage interest against rental income before working out what tax they owed. This led to higher tax bills, even if their income had not changed.

This is being phased through to 2020, where it will be replaced by a 20 percent tax credit.

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What do banks look for to approve an applicant for a buy to let mortgage?

Banks and lenders will look at a number of things when approving you for a buy-to-let mortgage. These include:
Your credit score
Your income
Your spending habits
Any criminal records

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Can You Get Buy To Let Mortgage As First Time Buyer?

While it’s totally possible to have your first mortgage as a buy-to- let, most lenders prefer borrowers who have had a standard mortgage prior to taking on a buy-to- let mortgage.
If you are approved, you will have to prove that you are not living in your own buy-to- let, and you will also have to pay a bigger deposit and higher rates than a standard mortgage.

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How are repayments calculated in a buy to let mortgage?

Repayments on a buy-to- let all depend on how much you’ve been approved to borrow. Your mortgage will be based on the amount of rental income that the property can expect to bring in.
Repayment amounts will differ from lender to lender, depending on the mortgage deal, but it will be calculated by working out the value of the house and the expected monthly yield from rent.

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6 Bayside Road, Gibraltar, GX11 1AA.
Company # 116550.

HIP INTERACTIVE PROPERTY UK LIMITED is registered in the UK, and adheres to The Standards of Lending Practice.

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