Five top tips for first-time landlords
If you’re thinking of buying a property as a buy-to-let investment, there’s plenty to consider about before taking the plunge. Here are our top five tips on getting started as a landlord.
Get your financial affairs in order
First, you’ll need to make sure your finances are in shape. Since the Mortgage Market Review came in to force in 2014, lenders have been operating stricter mortgage stress tests, so spend some time tidying up your accounts. The Bank of England is also keeping a close eye on buy-to-let, with Mark Carney recently confirming his intention to tighten lending criteria for property investors.
Most significantly, from April 2016 buy-to-let investors will have to pay a 3% stamp duty surcharge. Despite these changes, talk of the death of buy-to-let is greatly exaggerated. Property investment can still be a lucrative business – it’s just worth bearing in mind that you might need to have extra money aside for a bigger deposit and increased stamp duty costs.
Find the right property
Finding the right property is the most crucial element of buy-to-let, and it pays to take advice from a trusted local agent who can inform you about probable rental yields and market trends in your area.
First, consider location. Are there prominent schools, leisure facilities or notable new developments nearby? Carefully research property prices for different types of houses. You don’t want to take a huge risk on an undesirable area, but it’s also important not to arrive late to the party at last year’s property investment hotspot.
Finally, consider your target market. What kind of tenants are you looking to appeal to, and what kinds of properties are the most desirable in your chosen area?
Check you’re legally covered
You’ll need to ensure you adhere to the various legal regulations for landlords.
For example, all landlords need to have a Gas Safety Record completed by a registered engineer every 12 months, and you’ll need to have an Energy Performance Certificate (EPC) before you market the property.
You’ll also need to protect tenant deposits in a Tenancy Deposit Scheme (TDS), and conduct Right to Rent checks on your tenants. If you choose to use a management agency, they can help you with these.
Use a management agency
Using a management agency to look after your property can take a significant load off your shoulders. At the start of the process, the agent can find and assess prospective tenants, advise on yields and conduct inventory reports.
Once your tenants are in the property, the agent can then act as a go-between regarding maintenance issues, and will have specialists on call to deal with any problems quickly. If you’re time-poor or living far away, using a managing agent can be the best way of maintaining a positive relationship with your tenants and ensuring they stick around longer.
Know your responsibilities
Whether it’s keeping on top of small maintenance issues before they become big ones, or just staying in touch with your tenants, there are plenty of ways you can contribute towards a successful tenancy.
Tenants who feel comfortable in the property and valued by their landlord are the most likely to stick around, and long-term tenancies are the best way to avoid costly void periods.