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Making money from property: A landlord checklist for finances

It's fair to say making money as a landlord is not as easy as it once was.

Government crackdowns on landlord taxes, increases in stamp duty for buy-to-let properties, Brexit uncertainty and the incoming tenant fees ban have all forced landlords to reassess their finances in recent years.

Yet property investment, if done well, remains one of the best ways to secure a solid income and plan for the future.

Rental yields remain sound in Camberley, while capital growth continues on an upward trajectory, albeit a slower one than earlier this decade.

But landlords who evaluate their finances and invest with their heads rather than their hearts will the ones who continue to enjoy the fruits of success.

Here are Martin & Co Camberley's top tips for making money from property in 2019...

Assess your rental property income

Looking at your rental income and whether the numbers work for you should be on every landlord's radar.

Government legislation on the amount of income tax relief landlords can claim on mortgage interest are being phased in currently and, from April, you will only be able to claim income tax relief on 25% of your mortgage interest.

From April 2020, all mortgage interest will be subject to the 20% basic rate meaning all landlords should be evaluating their costs against their rental income NOW.

Deciding whether to increase rent is a huge decision and should only be done when all other options have been explored. Keeping good tenants is vital and rent rises can often spark a departure and lead to a costly void period, not to mention increased marketing costs.

Keep a reserve fund for emergencies

Making crucial financial decisions as a landlord is far easier if you have a cash safety net behind you.

Having fighting funds for each of your rental properties, to tackle maintenance emergencies or void periods, can mean big savings in the long-term.

Your reserve funds should reflect the value, age and size of your buy-to-let properties, as well as your costs (mortgage payments, mortgage interest, management fees etc).

Once you have your funds in place for each property you let, try to top up the pots each month from your rental income.

Review your buy-to-let mortgage

We are in a period of deep political uncertainty (as if you hadn't heard about the 'B' word!) and the economy and interest rates that underpin it are somewhat on edge.

Landlords should take time to review their buy-to-let mortgages. If interest rates rise once the UK's Brexit fate is finally confirmed, as many commentators expect them to, you could be better having your buy-to-let mortgage on a secure fixed rate.

Compare your current mortgage against other available options and run your numbers. With the March Brexit deadline looming, now is the time to re-assess.

Review your landlord insurance policy

Things can and do go wrong in the buy-to-let world. So, landlord insurance is an absolute must for anyone letting an investment property.

However, as a cost, it pays to shop around when it comes to landlord insurance.

Take some time to consider your current policy and review the cost against the level of cover before exploring other options.

Do not be tempted to reduce your cover to bring the cost down. The most important thing is you are covered adequately.

But do compare costs between insurers and speak to a broker to seek out a more competitive deal.

If you're a Camberley landlord looking to assess your finances in 2019, contact Martin & Co and see if our property management services are a good fit for you. One of our lettings experts will be happy to help...

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