The risk of Buy to Let properties is set to increase, with new rules being impose on private landlords, the choice of buying a property for the sole purpose of letting it out requires greater consideration than ever before.
However there are still distinct advantages to being a Buy to Let landlord, from the flexibility of managing an investment to the accumulation of wealth if house prices increase. However with stricter standards for landlords coming into force you’ll need to be certain that buying to let is right for you.
These 10 tips are designed specifically for Buy to Let landlords, to point out things that all Buy to Let Landlords should be consider when buying or managing a property.
1) Research the Market Before you Buy
One of the most important things is that you invest in a property that people are going to want to rent, that is where your income will come from after all.
Even when buying in an area familiar to you, be sure to find out how the local property market has been behaving and take the time to do your research. Focus on factors such as property values, rental yields, the presence of good schools, crime rates and transport links.
2) Find a Trustworthy Letting Agent
Having a letting agent you can rely on for accurate, practical advice will shape your experience as a buy to let landlord. A good agent will assist in all manner of things from finding suitable tenants, to ensuring your rent is paid.
3) Find Trustworthy Tenants
Although you may be eager to move in the first tenants you find, taking the time to find people who will treat the property with respect, not upset the neighbours, pay their rent on time and notify you of any issues will save you money and trouble in the long run.
4) Be Aware of the Changes in Regulations
As mentioned above, the Prudential Regulation Authority, part of the Bank of England are introducing more stricter rules for those who wish to obtain a Buy to Let mortgage. Furthermore Buy to Let Landlords are no longer able to offset their mortgage interest against their profits when they own a Buy to Let property as an individual as opposed to owning it through a limited company. Changes like this are not uncommon. While failure to comply with the law can have serious consequences.
5) Keep on Top of Your Finances
Consider whether you are in the market for capital gain or monthly rental income, bearing this in mind will help you manage your incomings and outgoings and ensure you never get caught out.
6) Know your Responsibilities
Knowing where the line is drawn between your responsibilities and those of your tenants and letting agents is essential. Your letting agent will advise on on matters relating to renting out the property, however generally you will be expected to pay the buildings insurance, ground rent, service charges, insure all items left in the property and go to court if necessary to recover unpaid rent.
7) Keep your Property in Order
The better looked after the property is the more it will be worth. It will increase in market value and ensure that the and money you’ve invested is growing. A more well maintained property, will also help attract suitable tenants.
8) Create a Detailed Inventory
A detailed inventory helps you and your tenants as it sets a standard for the condition the property is to be kept in and helps avoid disputes around maintenance of the property. It will also help with managing the deposit and monthly rent.
9) Prepare for Voids Unfortunately
It is highly unlikely your property will have tenants in all the time, meaning when it is empty it will not be generating income. You should prepare for this. Advertising for new tenants and carrying out renovations can also take weeks off your letting calendar so be prepared for when this happens.
10) Prepare for the Pitfalls
The risks associated with being a Buy to Let landlord will help you be prepared for those inevitable ‘rainy days’. Neighbourly complaints, unexpected repairs, increase in tax, all of these eventualities should be considered and prepared for to preserve your investment.
Is Being a Buy to Let Landlord for You?
Becoming a Buy to Let landlord carries a great deal of responsibility and is a considerable investment of your time and money. However if done properly it can be a stable, rewarding source of income. Before investing in a property always do thorough research, make sure it is financially viable and that it is a worthwhile investment, suited to you.
For more information and legal advice visit Talk2Solicitors.co.uk to get expert advice from Property Solicitors.