Many people looking to invest savings do so by purchasing a Buy to Let property where the monthly rent provides a regular income, probably with a better return than most short term savings accounts. However it is essential to check that the property, be it a house or a flat, can in fact be rented out. All leasehold flats have some form of restriction as to how they can be used and occupied and those restrictions can limit and even prohibit use as holiday lets or student lets.
In Bath, demand for both student and holiday accommodation is high but you must be sure you can use the property as you intended. Even if a Lease allows you to let the property, the Freeholder/Management Company have the ability to create and impose regulations on all leaseholders in the building which could prevent letting the property or even allowing lodgers. In addition to leasehold flats, the title to some leasehold and freehold houses also includes restrictions on use and occupation by only permitting, for example, “use as a single private residence in the occupation of one family” which clearly excludes holiday or student lets.
There are also certain areas in Bath where mandatory licensing is in existence for Houses In Multiple Occupation (HMOs) and which is being phased in for all areas likely to comprise multi occupancy properties. Therefore it is essential to establish if the property lies within an area which is subject to mandatory licensing and to ensure that it complies with the required Planning Permission and Building Regulation requirements before it can be used and occupied as an HMO and before BANES will grant the required HMO Licence. It should be noted that whilst a property may already have an HMO Licence, this is not transferrable to the new owner, who will need to make their own application for a new Licence.
If an investor wishes to obtain Mortgage finance to assist with the purchase of their Buy to Let property, there are a variety of options available which include a specific Holiday Let Mortgage, a Mortgage where a sole borrower attending University wants to sub-let rooms to a third party, and also where the borrower’s income is too low to support the Mortgage repayments alone they can rent a room to make up the shortfall in the monthly repayments.
As an investment property, and not a Main or Sole Residence, the purchase will probably be subject to the higher rate of Stamp Duty effective from 1st April 2016.