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3 Benefits of Owning a Buy to Let Property in Birmingham

1 December 2020 No Comment

Are you looking for a source of steady monthly income? Have you ever considered becoming a property investor? Buy-to-let properties have increased in popularity in the UK owing to the insufficient number of houses and flats for residents to invest in.

The lack of housing has made homes tremendously expensive for most individuals to afford, leaving them with no other alternative but becoming tenants. The rental yield provided by buy-to-let properties makes them appealing to investors. There is a multitude of Birmingham property options allowing investors to take advantage of the UK rental market.

Learn more about the benefits of making such an investment.

A source of passive income

Receiving regular rental income is among the most crucial benefits of investing in a buy-to-let property. Due to the remarkably high demand for buy-to-let houses and flats in the UK, it’s no wonder landlords experience a rise in income over time. Nowadays, the majority of residents in UK cities, such as Birmingham, cannot afford to invest in a home, hence deciding to be lessees.

The increase in population along with the deficiency of housing have made buy-to-let opportunities attractive, thus contributing to the increase in rental yield. For instance, the average rental yield in Birmingham is approximately five percent, higher than the largest part of UK regions.

When investing in buy-to-let properties, future landlords are supposed to consider all of the expenses in order to assess the approximate monthly income. Some lessors are required to obtain a landlord’s license, while landlord insurance isn’t mandatory but beneficial to have. Also, lessors are financially liable for any maintenance and repairs costs.

Moreover, the maintenance cost is largely determined by the size and age of rental properties. Becoming an owner of a large or old estate means spending more money on maintenance and repairs. Additionally, every lessor is expected to factor in the void periods when buy-to-let houses and flats are unoccupied. These periods are supposed to be as short as possible in order not to affect the income of investors. Click here to learn what landlords use rent payments for.

Capital growth

Apart from rental yield, capital growth is another essential benefit of investing in a buy-to-let property. It refers to the potential of the estate you purchase to grow in value in the years to follow. For instance, Birmingham is one of the most appealing cities when it comes to capital growth, as estate prices are expected to experience a significant rise in the following five years, as much as 4.5% by the end of this year.

Furthermore, the opportunity for capital growth allows buy-to-let investors to sell rental properties at higher prices after a couple of years. Nevertheless, capital growth not only depends on market trends but also on the condition of the estate and its location. Rental houses and flats situated in attractive locations are more likely to increase in value as well as those subjected to renovation.

Tax deductions

Another reason for investors to consider purchasing a buy-to-let property in Birmingham is the variety of tax benefits available to real estate owners. For example, the depreciation of rental estate allows investors to experience tax deductions, thus deducting the entire cost of the estate in several years.

Additionally, the expenses related to any kind of repairs made in the course of the year are deducted at the end of this period. It means that lessors can have the costs for flooring repair, repainting the interior, or fixing faulty appliances deducted in the same year these were performed. Also, lessors working from the comfort of their homes are capable of deducting the cost for any costs related to their home office.

Insurance premiums can also be deducted regardless of the insurance policy as long as it’s related to your buy-to-let investment. Lessors generally invest in flood, theft, landlord liability, and fire insurance. In case any damage happens to the property, they get reimbursed by the insurer. Go to this URL, https://www.britannica.com/topic/fire-insurance, to learn about the coverage of fire insurance.

Final word

Opting for such an investment provides numerous benefits in the form of monthly income, capital growth, and tax deductions!

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