Rental demand in many parts of the UK has never been higher.
New Year is about new challenges: gym memberships, diets and vows to stop smoking. The property market is full of challenges, too; prices around the country are set to remain flat or worse, with tentative improvements in the economy yet to filter down to homeowners.
This is why thousands of people have resolved to dive into the only housing sector that is truly booming: buy-to-let (BTL).
The rental industry’s figures show why BTL is set to be 2013’s favourite career change. Average UK rents have risen by 13.6 per cent since 2009, while capital values in most places have stagnated or fallen. Another two per cent rise is predicted across the country this year. And the proportion of UK households renting has increased in the past decade from 31 per cent to 36 per cent, according to the latest Census figures. This means that in parts of big cities, there is huge demand for rental properties. In Westminster, for example, four out of every 10 homes are privately rented, not owned. Little wonder that Britons from all walks of life have recognised this sector as a sound investment even in troubled times.
Property queen Sarah Beeny handles a portfolio of rental properties. Former Blue Peter presenter Konnie Huq owns London buy-to-lets, and one-time Bond girl Fiona Fullerton has rental homes in the Cotswolds. Former tennis star Tim Henman has investments in south-west London and has bought into a property club that owns and rents luxury villas across Europe.
But how can you follow in their footsteps?
Phil Spencer’s London approach: The Location, Location, Location star and host of Channel 4’s The Common Denominator has two rules: buy somewhere you know and target the type of tenant you want. “If you understand the housing market where you live, you are likely to make a more informed decision than if you were trying to buy 150 miles away,” says Phil. “Then decide what type of person you want to rent your property. Students, young professionals, couples or families? What do they look for? How much will they pay? How will they travel to
work?”
His own buy-to-let portfolio targets young professional renters in the capital. “Several hundred thousand graduates arrive in London each year for their first jobs. They have lived with friends during university and usually wish to continue doing so,” he adds. “This is why I have bought three-bedroom Victorian houses. I convert one room to get a fourth
bedroom and let to four sharers.”
Tommy Walsh’s DIY style: He shot to fame as the cheery builder in Ground Force, but Tommy Walsh has starred in 11 television series. The DIY guru has also written nine books about renovating. But his first love is
actually buy-to-let. “We acquired our first BTL 25 years ago. My wife, Marie, and I have always seen it as a good investment,” says Walsh.
Unsurprisingly, he is keen on fixing-up houses. This makes them more likely to produce capital appreciation when they are eventually sold. They also produce good yields until then. Modernised properties let quicker and for higher rents than older properties, too.
But he stresses you must know your limits: “Avoid buildings with major structural defects unless you are an experienced builder with deep pockets.” He has three practical pieces of advice for would-be landlords:
Be efficient when dealing with tenants. “References must be thorough, including credit checks and finding guarantors (if needed). We insist rent is paid by direct debit on the due date with cleared funds. Deposits are returned only when all contractual requirements are met,” Walsh explains.
He also advises landlords to respect their tenants and avoid costly disputes. “We always redecorate and clean or replace carpets after a long tenancy. We video the property’s condition at the handover as well as creating a paper inventory.” Finally, he adds, do not be greedy: “We tend to charge a little less than the going rate.” This gives him a wider choice of tenants, which often allows him to tie them into longer leases, providing
more financial security for everyone involved.
How to be a buy-to-let landlord:
• Do your research. Pick a sector: students, professionals, first-time buyers or retirees?
• Buy in winter when sellers are anxious and may sell cheaply
• Don’t buy in a large scheme, where 75 per cent of homes are to let
• Choose areas with diverse employment, great transport links
• Find the right mortgage, or remortgage your main home if this option is cheaper.
• Most buy-to-let mortgage offers require at least a 25 per cent deposit – a few want 40 per cent
• Avoid ground-floor flats, which tenants believe are security risks
• Family homes rent well if they are in key school catchment areas.
• Aim for five per cent return on your investment per year
If you are an existing landlord or potentially a first time landlord get in touch with Belvoir Sheffield today to take advantage of our vast expertise and experience to ensure you are getting the best advice.
call us now for more information 01536 415415
