Buying property to let out is still a very attractive investment opportunity. It means that there are a lot of people coming into the market as landlords for the first time. If you’re thinking of making the jump into letting property you need to be aware that there are pitfalls that can cause serious problems. With that in mind, here are seven top tips to help out first time landlords.
- Letting agent or not?
All landlords must make a fundamental choice of using a letting agent or managing the let by themselves. The advantage of a letting agent is that they will take care of a lot of the tricky stuff including helping to find tenants and dealing with any problems that arise – but it comes at a price. Letting agents will take somewhere in the region of 10 per cent of your rental income. If you feel comfortable dealing with tenants yourself you can save the money, but for a first time landlord you might best of working with a letting agent to start with.
- Interior design with tenants in mind
There can be a tendency for first time landlords to buy the property and they lay it out in a way that suits the way that they live. It’s important to remember that what your tenants want is likely to be different from what you would want, so you need to design the property with them in mind. This is where it becomes important to have a target market in mind for your property. If you know you are targeting professional couples you’ll take a different approach to the interior than if you were designing a property for young families.
- Insurance is a big deal
As a landlord you need to have landlord insurance. Remember that this is different from the standard insurance that all homeowners need to have and it protects you from a range of problems you might encounter with your buy-to-let. Every landlord insurance option will be different so it is vital that you read through every policy carefully to understand what each one covers you for. Accidents can and will happen so you need to be protected for that as a minimum, but you might also be wish to be covered in the event of emergency repairs or a legal dispute with a tenant.
- You need a safety net
Many first time landlords make the mistake of pushing themselves to their financial limit to get the property they want. The problem can then be that they don’t have any savings to deal with any voids or unforeseen emergency problems. Be sure that you are putting yourself in a great position to make a return on your investment but don’t do it at the cost of your financial security. Have a safety net in place to pay for any freak occurrences or unexpected vacancies.
- Take a deposit
It might be tempting to offer your let without taking a deposit but it can leave you in a very difficult position if your tenant badly damages the property or pulls out of the agreement early. Taking around one month’s rent is standard practice in the industry. You are then required to register your tenant’s deposit with an approved Tenancy Deposit Protection scheme.
- Have a tenancy agreement created professionally
You should have a tenancy agreement written up so that there is no ambiguity on both your rights and the tenant’s rights. The agreement will set out the terms and conditions of the tenancy, detailing what aspects of upkeep each party is responsible for and the notice period. With no tenancy agreement you leave yourself open to legal disputes and other problems.
- Comply with regulations
You need to remember that owning a buy-to-let property is very different from owning a home. You need to comply with basic legal regulations for everything from fire, gas and electric to furniture. Things that you might think of as small issues in your property might be grounds to make a property legally unsafe for tenants. If possible you should have an independent safety inspector come in to check through the property and ensure that there is nothing that would invalidate your insurance or put tenants at risk.
This article was written by Dakota Murphey, independent content writer working alongside Brian Gale Surveyors, members of the Royal Institution of Chartered Surveyors (RICS) who were consulted for some of the information in this post.
