Buy To Let Property Accountants, Inflation Rates & Your Next Investment

If you’re a landlord with a full portfolio of buy-to-let properties, you more than likely keep up with the latest industry news and changes that will affect you. It may come as a surprise that the most recent negative attack on landlords has come from Legal & General Investment Management – the country’s biggest investment company, which happened to be a major player in the Build to Rent sector.

LGIM has slammed “unscrupulous” landlords over claims that a lot of buy-to-let owners are taking people’s money and providing a bad experience for their tenants.

In an interview with the Daily Telegraph, global head of real assets at L&G, Bill Hughes, claimed many buy-to-let landlords have been “suboptimal and substandard”.

The statement made by Bill Hughes has been met with many landlords coming to the defence of the industry. Managing buy-to-let properties is not an easy profession to maintain and understanding the buy-to-let Landscape and everything from tax to providing for tenants is crucial to success in property.

Buy-to-let investment involves purchasing residential property with the sole intention of renting it out to tenants. While it can be a lucrative venture, it also comes with a plethora of financial considerations, from mortgage financing and rental income to maintenance costs and tax obligations, it’s crucial to grasp the fundamentals of this sector.

If you’re looking to take the buy-to-let property market by storm, choosing the right location is crucial. Whether you’re looking to expand your portfolio, or you’re a newcomer to the real estate market, choosing the perfect buy-to-let location will improve your business chances.

Buy-to-let purchases & Interest Rates

In a recent study, Start Up A-Z have compiled data to find out which locations in the UK are the most profitable for buy-to-lets.

They found that in December 2023, average house prices were estimated to have fallen by 2.1% due to high mortgage rates and the cost-of-living crisis. However, 47% of landlords believed the Bank of England’s base rate would fall in 2024.

Unfortunately, the Bank of England announced last week that interest rates will remain at 5.25%, marking the sixth time in a row the rates have been held.

Here’s a summary of some of the details that have emerged alongside the announcement:

The governor of the Bank has said he is “optimistic that things are moving in the right direction” but needs to “see more evidence” of falling inflation before cutting the base rate. Although not the news that most buy-to-let buyers wanted to hear, it does look as though we’re close to this falling soon.

According to Andrew Bailey, Bank of England Governor, it is expected that inflation will fall “close” to the target 2% within the next couple of months – it has fallen to 3.2% but is still above the Bank’s target of 2%.

Inflation figures will inform any future interest rate cuts, however a definite date was not given. However, we did learn that activity within the housing market is “beginning to pick up” despite prices having been “broadly flat” over the past year.

The most profitable buy-to-let locations

The study explored 50 of the biggest cities to find the best buy-to-let locations in the UK, taking into account average property prices, rental costs and letting agent fees, but also prime locations known for their culture scene and business opportunities, overall, to determine the net yield and potential returns on property investment.

Joint first place:

Manchester

  • Net yield: 6.9%
  • The average buy-to-let property price: £251,557
  • Average monthly rent: £1,675

With an economy worth £62.8 billion, Manchester has firmly cemented itself as a major business hub in the UK. In fact, it’s right behind London now in terms of opportunities in business, increasingly becoming more and more popular with millennials and gen-z.

With deep roots in music, sport and fashion just to name a few, Manchester is a very worthy contender for your next buy-to-let location, with high rental yields, a strong economy and bustling job opportunities.

P.S. We promise we’re not biased… this has nothing to do with Gorilla Headquarters being just up the road in Bolton!

Glasgow

  • Net yield: 6.9%
  • The average buy-to-let property price: £230,619
  • Average monthly rent: £1,595

It seems that opting for cities in the North of England and Scotland are generally better for yields than cities in the South of England and London. In Glasgow, average house prices in the West End area have risen by 27% since 2019, which is great news for property investors. Glasgow is Scotland’s economic powerhouse, generating £19.3 billion GVA per annum.

Aberdeen

  • Net yield: 6.9%
  • The average buy-to-let property price: £189,633
  • Average monthly rent: £909

According to Rightmove, Aberdeen is the third cheapest city for first-time buyers. It has been predicted that house prices there will rise 1-2% this year, and the average cost of a mortgage, utilities and council tax is only 37% of the median monthly salary.

Benefits of a buy-to-let property accountant

If the buy-to-let industry is calling your name, or you’re a start-up looking for advice on setting up your business, the first thing you’ll need to decide is whether to keep the properties in your name as a sole trader or form a limited company.

When it comes to business tax, there are several benefits to working with a property accountant, who can give you advice whether you should operate through a limited company or as a sole trader.

Tax efficiency and compliance

As a landlord you have the responsibility of ensuring that you meet your tax obligations, including filing your tax returns and paying any taxes due. When you appoint a landlord accountant your tax affairs will be expertly managed ensuring that your tax returns are timely and accurate.

This gives you peace of mind that you won’t incur any fines or penalties from HMRC and frees up your time to focus on managing and growing your portfolio. A landlord accountant will also ensure that your business is operating as tax-efficiently as possible to help you maximise your take home pay whilst remaining compliant.

Financial optimisation

Effective financial management is paramount to the success of any buy-to-let business. From budgeting and cash flow management to rental yield optimisation, strategic financial planning can significantly enhance your returns and long-term viability as a landlord.

A buy-to-let property accountant brings a wealth of financial expertise to the table, offering insights into optimising rental income, identifying cost-saving opportunities, and assessing the financial viability of potential investment properties, helping you make informed decisions.

Tailored advice and support

Every landlord’s situation is unique, and generic financial advice may not suffice when it comes to maximising returns and facing challenges in the buy-to-let market. A buy-to-let property accountant at Gorilla Accounting provides personalised guidance and support tailored to your specific circumstances and investment goals.

Time saving and peace of mind

Managing a buy-to-let property portfolio can be time-consuming and stressful, particularly when juggling multiple properties, tenant enquiries, and maintenance issues. Trusting your qualified buy-to-let property accountant with your financial affairs can provide peace of mind and alleviate the admin associated with property management.

Using FreeAgent with Gorilla Accounting

By outsourcing financial tasks such as bookkeeping, tax filings, and financial reporting to a trusted professional, landlords can free up valuable time to focus on core business activities, explore new investment opportunities, or simply enjoy a better work-life balance.

When you appoint Gorilla Accounting FreeAgent accounting software is included at no extra cost in all our great value fixed-fee accounting packages. It’s specifically designed for small businesses, whether operating through a limited company or as a sole trader.

FreeAgent is cloud-based so you can access your accounts at any time on any device with an internet connection to get a comprehensive real-time overview of the financial position and health of your business. It has a host of clever in-built features and functionality, making laborious and repetitive accounting and admin tasks such as calculating and preparing your tax returns much easier and less time-consuming.

Who we work with

At Gorilla Accounting, we work with both residential and commercial landlords, helping people with a wide variety of portfolio sizes. Our tiered pricing structure depends on how many properties you own, helping us tailor our services to your specific needs.

Residential Buy-to-Let Landlords

As buy-to-let accountants, we often work with individuals who own between 10 to 15 residential properties, but we also help landlords with portfolios that are smaller or bigger than this. Our expert team of landlord accountants have vast experience managing accounts of all sizes.

If you would like to expand your property portfolio by developing homes into rental accommodation, we can help take care of your tax and accounting requirements, ensuring you submit the correct documentation to HMRC.

Commercial Landlords

Many of our clients invest in commercial properties rather than residential. Managing your portfolio will be done differently to those with residential buy-to-let properties, but can be managed just as efficiently and effectively.

Gorilla Accounting can easily help you stay on top of your finances so that you’re always compliant with HMRC rules. We can offer advice on issues unique to commercial landlords including business rates and stamp duty land tax.

Appointing Gorilla Accounting

The role of a buy-to-let property accountant cannot be overstated. From navigating tax complexities and regulatory requirements to optimising financial performance and providing tailored advice, our expertise and guidance are indispensable to landlords seeking to maximise returns and sustain long-term success.

By appointing a buy-to-let property accountant, landlords can benefit from expert financial management, ensure compliance with regulatory standards, and gain peace of mind knowing that their investment is in capable hands. Get in touch today to see how we can help you.

 

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