16 Mar

10 Things to consider when investing in a buy to let property

The demand for rental property means that there is a lot to be said for investing in a buy to let property, but there are many things to weigh up before making your investing.

Here are 10 things to consider when investing in a buy to let property.

What are your aims with the property?

The first thing to ask yourself is what do you want to achieve with your property investment? If you are considering a buy to let property, you should be looking to bring in additional income. If you are treating the property investment as something that will give you a long term return, you can achieve this aim, but you may underestimate the amount of work involved with operating as a landlord and running a buy to let property.

With the level of demand for rental accommodation in the UK these days, there are opportunities for people who invest in buy to let property, but this should be your aims and ambitions.

Find the right location

It may be that you are limited in where you can buy property. If you want to be hands-on landlord, you need to buy property within easy reach of where you live or work. This may limit your ability to find profitable property. If your key aim is to make profit and the location isn’t that important, you will have more flexibility with respect to finding the property that is best for your overall aims and needs.

Know your budget

You need to know how much money you are able to invest in property, and you also need to know what you can afford to pay out each month. There are costs associated with being a landlord and while you will hope to make a profit that sees the property pay for itself before too long, you need to be aware that the initial months can be testing of your finances.

This is why you need to be clear about your finances and what you can afford to pay; and this is true for every aspect of the role. The mortgage, stamp duty and legal fees are all immediate costs and of course, you will incur costs providing a landlord service.

Buy to let mortgages are different from normal mortgages

If you have obtained a mortgage or two in the past you may feel you can obtain a buy to let mortgage with a minimum of fuss and effort, but there are differences between these mortgages. Your finances are still taken into consideration with a buy to let mortgage but the lender will also look at the rental income you expect to receive and the return you get from your property.

You will also be expected to place a 25% deposit on the property, because lenders believe the risks are higher with this style of mortgage.

Vet tenants

The quality of tenant is one of the most important factors in whether a landlord succeeds or fails. This is why you should take the time to vet tenants and ensure that they are likely to pay on full and on time, and they should also have a good reference, which provides you with peace of mind that they will treat the property with respect.

Know the laws you need to meet

There are an increasing number of legal responsibilities for landlords to contend with, and it is vital that you know what impacts on you. You need to declare that you are a landlord for tax purposes, landlords need to ensure that all tenants have the legal right to remain in the United Kingdom and there are many other issues that you have to comply with legally.

This is why it makes sense to call on the assistance of legal professionals who know the law inside out and who can advise you on what you need to do in order to avoid breaking laws as a landlord.

Think about health and safety

While there is a huge demand for rental accommodation in the United Kingdom, landlords cannot present any property for rent, it has to meet health and safety standards. The expected standards are changing and updating all the time, with further Energy Performance Certificate related changes coming into effect in 2018. It is vital that you make sure your property complies with all health and safety standards before placing it on to the property market.

What will you do if something goes wrong?

As a landlord or property owner, you are the person that the tenant will turn to if something goes wrong. In the case of an emergency, such as a burst pipe or a broken boiler, there is a need to act quickly. This is why you should have a plan of action in place in advance of anything going wrong. Whether you are going to carry out repair work yourself or you will hire a professional you need to know what you will do in advance.

If you don’t know, serious damage could be caused in the time it takes to resolve the issue.

How will the property be maintained?

Of course, you don’t just need to be able to respond or react to problems or emergencies as a property owner; you need to maintain the property. Your buy to let property is your investment and if it isn’t well maintained, it will lose value; and this could see you lose out in the long run.

As a property owner, you should make it clear who is responsible for maintaining different aspects of the property and the standards you expect for the property. Like most elements of letting a property, it pays to have these things in written and agreed in advance.

How will you convince tenants to remain in your property?

While it is essential to get people into your property, successful landlords ensure their tenants remain in property. When tenants remain in property, there are no void periods, which mean a landlord makes more money. There is also the fact that when the property remains filled, you don’t have to waste time, money and energy on advertising the property, vetting tenants and beginning the whole process once again.

If you are considering entering the Buy to Let market, considering these 10 things will give you a great starting point when it comes to being a success as a landlord.

Cookies We use cookies to ensure that we give you the best experience on our website. To find out more about our cookies policy, see our cookies policy here or in the footer.