Thinking about becoming a landlord?
With reports highlighting that tenant demand for rental property remains high(*), and with many continuing to suffer poor returns on their investments in view of low interest rates, it’s no wonder that becoming a landlord is seen as an attractive proposition, but what should you do to make this happen? Your Move provides some top tips.
Decide if you can afford it?
Consider the cost of buying, refurbishing, and maintaining a rental property but also the potential returns you’ll gain.
- Buying costs, unless you have an existing property, this will include the purchase price but also associated fees and expenses that come with it and, remember, if you plan to rent your property as a business you will need to pay Class 2 National Insurance
- Refurbishment costs could relate to simply refreshing the paintwork or include the cost of more widespread structural changes – it’s worth finding out how much this could be. Consider too the cost of ensuring your property is compliant with lettings legislation and that appropriate certificates are gained, or work carried out to ensure this. You may also need to factor in the cost of any furniture or white goods you want to include and any ongoing bills you are prepared to pay
- Maintenance costs can vary dependant on the property you buy. It’s important, however, to factor in unexpected costs that might arise and also understand your ongoing legal obligations to make sure your property is safe and of a good standard for your tenant
- Rental income and yields should also be considered when considering affordability because, although you have the costs associated with being a landlord, these can be offset against the income you’ll gain and the growth in value of the property you own
Find a mortgage to buy
There continues to be a good choice of buy to let products on the market. It’s important, however, to consider a whole of market mortgage broker to help you in finding one. Going to just one lender will limit your choice and could mean you miss out on a better deal elsewhere. Embrace Financial Services, who work in partnership with Your Move, may be able to help.
Find a property
Choosing the right kind of property to let is important to ensure there will be demand for it and that you can justify a reasonable rent. It’s worth considering:
- What kind of tenants you want i.e. student, families or professionals and what property would be suitable for them
- Whether you want to buy an existing rental property, perhaps with tenants in situ, or if you want to convert a larger property to individual flats, for example
- The changing priorities of tenants, as a result of Covid-19, means there’s growing popularity for ‘out of town’ properties rather than city centre flats and apartments, particularly by professionals who now work from home
- Likely rental income and yields and whether these satisfy your needs
Consider if you need a letting agent
There are numerous advantage to using an agent, like Your Move, because they can:
- Provide advice and guidance about the popular areas, likely demand and anticipated rental yields
- Offer different levels of support dependant on how much control a landlord wants, from simply finding suitable tenants to more widespread support like organising ongoing compliance or maintenance checks and work
- Provide ongoing support should things go wrong – including providing help in dealing with the legal aspects of letting a property and acting as a go-between, between you and the tenant
Overall the decision to become a landlord can be a tough one and why it is vitally important to understand what’s involved from the outset. At Your Move we have a dedicated First Time Landlord section on our website and a team of property specialists in each of our branches to help you – why not make contact with them today?
(*)Propertymark’s Private Rented Sector Report for August