A Guide for Investors

In addition to the A Guide for Buyers, when purchasing a property as an investment, the buyer should be mindful of the following issues:

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1. Article 4 Area

Is your property fall within the Article 4 area which has restriction on permitted development right or change of use etc.

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2. Conservation Area and Listed Building

Similar to the Article 4, if your property is within the conservation area or being a listed building, there may be restrictions on renovation, change of use or alteration to the external look of the building etc. 

 

3. Competition on the rental market

You should research the number of rental properties and the rent level that will be in directly competition with your one within the neighbourhood. You can check the rental listing on online platform such as Rightmove and Zoopla, or even Gumtree.

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4. Restrictive Covenants on the title

Before you complete your purchase, you and your solicitor should check whether there are restrictive covenants on the title that will have restriction on the use of the property in any shape of forms.

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5. Local Demography

You should understand the type of tenants you are likely to get in your selected location. How diverse they are in terms of employment for example. Are they all mainly work for one big employer in the area? How secure are they if the big employer decides to move out the town?

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6. Company or Personal Name?

The UK Government changed its tax regulation on private rental sector a few years ago, known as Section 24. Unincorporated landlords can no longer deduct mortgage interest and other finance related costs against their rental income to reduce the amount of tax in their self-assessment. In simple terms, section 24 restriction usually kicks in when the landlord's overall income of a financial year goes over the upper tax band 40%, currently at £50,271 in 2024/2025. Everyone's situation is different, therefore, an accountant specialised in property investment will be able to advice you on this matter.

 

However, Section 24 does not apply if  the property is being held under a limited company.

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If you want to know about an innovative way to manage a rental property via a limited company, please feel free to contact us.

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