From tenants to buy-to-let mortgages, when it comes to investing in property, you'll always want to find the best available. And our top tips should help...

Buy-to-let investing is tougher than ever, with landlords battling a tax crackdown, and constant tinkering with the rules.

But even so, investing in property still appeals to many, given the potential for hefty returns if you’re willing to be patient.

Before parting with your cash, here are five tips for long-term gains.

1. Make sure it’s right for you

You should know all about the risks, as well as the potential upside, from investing in bricks and mortar before piling into property investment.

While this is a popular route to profits in the UK, you need to have your head screwed on – particularly if you’re new to the market.

Firstly, make sure it’s the right move for you. This means you already have a cash buffer in place to provide rainy day funds, preferably worth about three to six months’ salary.

As a general rule before you invest in anything, you want to already have some cash saved that’s easily accessible.

Also remember that your money might perform better elsewhere, and the value of property can rise as well as fall, like any investment.

You are tying up capital in a property that will take time to sell, so consider that you are unlikely to be able to release cash quickly.

By comparison, investing in the stock market also involves risk, but you will be able to sell shares at speed if you need to. Then again, you can’t add value to a poor-performing investment by renovating or doing some DIY, like you can with a property. 

Property investing may be a potential goldmine if you’ve done the research, and strike the market at the right time – but go in with your eyes open.

2. Know your options

Bear in mind that when it comes to investing in property, you’re not limited to physical bricks and mortar.

You don’t even need a stack of cash these days. For example, you could invest from just £100 in a fund, and benefit from rental income alongside any potential gains from rising property prices.

Your money is placed in a fund that invests in some of the UK’s most popular buy-to-let locations. You may pick from one focused on Leeds, Manchester and Birmingham, or another that invests in London property.

Read more: How to include property in your portfolio

If you haven’t yet used your 2018/19  £20,000 tax-free ISA allowance, you could opt for’s Property ISA, or shift previous years cash built up with other ISA providers into a Property ISA. 

Alternatively, there’s the option of a Standard account, or even investing in a fund towards retirement, through a self-invested personal pension (SIPP). 

This is a much cheaper and hassle-free way to invest in buy-to-let, but unlike with a cash ISA, your capital is at risk and your investment can decrease as well as increase. Tax rules also apply and can change.

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3. Do your sums

Make sure you can afford to invest in property before taking the plunge. This may sound obvious, but it can be easy to overlook recent tax rule changes – which risk leaving you losing money on your investment. 

Factor in the extra 3% Stamp Duty Surcharge on second homes you'll pay if you’re buying an additional investment property in the UK. 

There’s also the gradual whittling away of mortgage interest relief, which will be capped at the basic rate of 20% by April 2020. 

If you’re paying a hefty chunk in mortgage interest payments every month, which could be offset against your tax bill, this could make a big different to profits – particularly for higher-rate or additional rate taxpayers. 

4. Know your tenant

What kind of tenant do you want to attract? Are you hopeful of university students, young families or professionals? The type of tenant will determine what kind of property you choose to invest in. 

If you’re after students, for example, you don’t need to invest heaps in a plush pad. Somewhere close to a college or university with decent transport links and basically furnished will probably fit the bill. 

But if you want to attract young professionals, you may need to boost your budget, as an investment property probably needs to be of a higher standard. Meanwhile, young families may want certain amenities, such as local schools and a playground. 

Once you understand the needs of your prospective tenants, you can start the property hunt, and really know what you’re looking for. 

5. Research your mortgage options

It can be tough to borrow enough to buy a buy-to-let property. You may need to jump through a hoops to convince mortgage lenders to hand over a big enough sum. 

If you are shelling out for a mortgage for another property, or are what’s known as a ‘portfolio landlord’, with several buy-to-lets on your books, you could find it a particular struggle. 

Lenders take all your regular outgoings into consideration, scouring bank statements as they would if you were applying for a standard mortgage.

Meanwhile, lenders are setting ever-higher bars for the amount of rent a property must generate compared to the mortgage debt. 

This is known as the ‘interest cover ratio’, which has been steadily rising from around 125% to 145% over recent years. 

If you’re investing in four or more properties, lenders are assessing all properties in your portfolio to check you can afford another mortgage.

If a property isn’t washing its face on the sums, you may find it difficult to get another deal. 

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This article does not constitute financial advice. If you are unsure about whether investment is right for you, you should seek independent advice before investing, including tax advice.

Zoopla Limited is an introducer appointed representative of Gallium Fund Solutions Limited (Reference number: 487176) which is authorised and regulated by the Financial Conduct Authority.

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