With the UK rental market seemingly buoyant compared with the rest of the property sector, the idea of becoming a landlord is getting more and more attractive to buyers. Read our guide to find out what to consider if you want to enter the world of buy-to-let investing.
Selecting a property
There’s more to becoming a landlord than simply buying a house and advertising for tenants. To be truly successful, you’ll need to choose the right property in the right area, having done your research to identify the places where you can enjoy a respectable yield.
Factors to consider are:
• Location - If you want to rent to families, choosing a property near schools and in an area generally seen to be safe and quiet is a good idea. Similarly, young professionals will want to live somewhere close to transport links, shops, bars and restaurants. Another thing to think about is how easy it would be for you to get to the residence from your own home (if you’re not going to get an agency to deal with the rental for you, that is – see ‘Managing your property’ below).
• Type of property - Houses are suitable for families and large house-shares, e.g. among students. Apartments are more likely to appeal to single tenants or couples, especially if they’re centrally located.
• Property market - Speak to a letting agent about the rental market in the area you wish to buy in. There’s little point in purchasing a flat somewhere that has very little demand for lets. Similarly, looking at house price trends will give you some indication of whether your investment is likely to appreciate in value in the future – crucial if you intend to sell up at some point.
Financing your purchase
Once you’ve decided on a suitable property, you’ll need to make arrangements to finance the transaction. Buy-to-let mortgages are available if you don’t have enough capital to pay for the property in full upon completion – speak to a reputable broker about finding the best product for your needs.
With the arrangement of a mortgage comes the need to sort out other financial issues, especially buildings and contents cover. Again, it’s advisable to contact a firm that can search the market for appropriate UK landlords’ insurance policies. Don’t forget to also consult a financial adviser to see what your stamp duty and other tax obligations are, too.
Managing your property
Next, you will need to decide how your rental will be managed. You can either handle everything yourself or appoint a lettings agency to do the bulk of the work for you. A decent agent will advertise your property, screen potential tenants, sort out a contract, conduct repairs and generally provide the main point of contact for residents. The agency should also be fully up to date on the legislation relating to letting dwellings to third parties.
If you have the time and also want to save on the agent’s fees, by all means do all of this yourself, but you will need to conduct a hefty amount of research into what your obligations are as a landlord and dedicate some time to interviewing tenants, inspections and sorting out repairs when required.
Do you have any other tips for would-be landlords, whether they’re on choosing a property, getting a mortgage or managing the rental? Leave your thoughts in the comments below.