Although the government has increased costs for buy to let landlords, it is still possible to make a profit on buy to let investments.

Buy to let was once regarded as a dream investment with thousands becoming landlords to benefit from rental income and capital growth.

When George Osborne was Chancellor he claimed that amateur landlords were stopping first time buyers purchasing homes. That is why he increased the stamp duty to 3%, adding an average extra cost of £7,500 to the purchase price of buy to let homes. The mortgage payment tax relief for landlords is being phased out.

Though these measures have put off some investors, it does not mean that the dream of earning income from buy to let investments is dead. Many lenders have introduced attractive five-year fixed commercial mortgages for landlords and several have reduced their interest rates.

Location is important. Landlords can expect higher rental yields in the North of England compared to London and the South. As James Cameron, director of Vesper Homes said:

“In Manchester, you can get yields of 8 to 9 per cent plus a greater chance for capital growth as the property market is still relatively buoyant.”

Landlords with several properties have set up limited companies to save tax.

It is harder for the amateur landlord to make a profit. With careful financial planning and purchasing a house at a decent price in an area with high rental yields, it is possible to make a good profit.