To help beginners buying an investment property, we include typical amounts to budget for:
- The property itself. Your biggest cost by far. To buy with a buy-to-let mortgage, you’ll need a deposit of at least 25%. Your purchase price will of course be clear if you’ve already paid it, but it’s not that simple if you’re looking to buy. The asking price is not the same as the property’s actual market value – the price you should pay.
- Stamp duty. As part of the Great Buy-to-let Bashing of 2015, our esteemed chancellor walloped investors with an extra 3% stamp duty on buy-to-lets. Work out what you’d pay (or gloat about what you’ve saved under the old regime) with the handy calculator at the sundaytimes.co.uk/stampduty.
- Legal fees. Solicitors’ service levels vary, to put it politely. This is not a corner worth cutting: snail-paced conveyancing can lose you a deal, not to mention cost you even more dearly if your solicitor misses something nasty. Avoid any websites like supercheapsolitors.com; budget £750–£2,000 including legal searches.
- Surveys. Your mortgage provider will expect you to pay for a simple valuation (£300–£400) to check the property is worth its price. You can also do your own survey to check the building’s structure. A Home Buyer Report (£350–£950) is enough in most cases; do a full Building Survey (£500–£1,300) if the property is listed, old or of non-standard construction.
- Finance fees. There are mortgage arrangement fees (as much as 3% of the loan), booking fees (£100–£200), broker fees (£0–£500), for-the- fun-of-it fees…
- Works. It’s usually wise to set aside a few hundred pounds for fixing snags and redecorating.
- Furniture – if you’re letting your property furnished, that is. With clever buys, you can furnish a two-bedroom flat to a high standard for under £2,000.
- Search agent fees if you’ve used your own buying agent to find the property (2%–3.5% of purchase price).