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Buying to let is considered a serious investment and should not be conducted without some equally serious research. Our top ten tips will get you on the right path to finding out all you need to know to become a seriously successful landlord.
1 -- Choose the right property
Ensure the property is in an area well suited to letting. It is a good idea to take advice from local specialist letting agents on the most suitable area and types of property in demand.
2 -- Get the right mortgage
A wide range of mortgages are now available for the buy-to-let sector. Seek advice from your financial advisor and take your time to consider the most appropriate mortgage for your needs.
3 -- Consider the hidden costs
As the landlord you will be responsible for ensuring the maintenance of the property. Make sure that the rent covers the cost of maintenance and insurance, as well as the mortgage.
4 -- Always have some back-up
Try to maintain a reserve fund, should anything go wrong. This could be tenants defaulting on rent payment, along with the resulting court fees or simply periods when the property is empty.
5 -- Choose the right letting agent
You could manage the property yourself, but for the time-poor, a letting agent will manage the property for a fee of up to 15% of the gross rental income. This fee usually includes property management, finding tenants, collecting references and rents.
6 -- Put the right tenancy agreement in place
Always have a tenancy agreement in place before a tenant occupies your property. Your letting agent or solicitor can help you with this.
7 -- Make sure you have the right insurance
As the property owner you have the responsibility of insuring the structure of the property, including any permanent fixtures and fittings. A range of insurance policies exist specifically for the buy-to-let market.
8 -- Sort out your tax position
Becoming a private landlord may affect your tax position and profits you earn from the property could be liable to capital gains tax, charged at the highest rate of income tax. Consult with your tax or financial advisor to find out the most tax-efficient way of running your buy-to-let.
9 -- Produce a detailed inventory before tenants move in
If you are letting a furnished property, always make sure the tenant signs a detailed inventory of all contents. This will help safeguard against any missing or damaged items that could be uncovered when they leave.
10 -- Always get a deposit
It is very important to get a deposit from your
tenants before they move in. This will help to protect you
against any damage caused by tenants or a default on rental
payments.
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