Tips for becoming a landlord
While interest rates remain low and house prices continue growing, buy to let is still a popular investment option with rental yields delivering good returns, however, there are some key things to consider before becoming a landlord.
- Understand your market
To help decide what type of property to buy and how much you can expect to rent it for, you’ll need to do some research on your chosen area and the types of people that are renting properties there e.g. families, students or professionals.
While you may have what seems like an obvious choice in mind, you’ll need to think carefully about the pros and cons of your chosen location and how well a rented property would perform in that area. Have a look at the local market and see what rental prices and property styles are currently on offer.
- Weigh up the costs v’s the benefit
There are pro’s and con’s to becoming a landlord and understanding all of the expected and unexpected costs is imperative in working out what you can afford.
The legal process of buying a buy to let property is the same as buying a private home and you will still need to account for mortgage costs, the deposit and the legal fees. Don’t forget you will also pay stamp duty at the higher rate on your second property.
Even in popular areas properties can sit empty, so you’ll also need to be able to potentially afford to pay two mortgages if this happens. It would also be worth thinking about what affect any rise in interest rates would have on your affordability.
Other costs to consider are the ongoing repairs and renovations, the costs of being legally compliant, any appropriate buildings and rent guarantee insurance and letting agent’s fees if you go down that route.
- The legal stuff
As a landlord your legal responsibilities include obtaining the various assessments and certificates for the property itself, such as the Gas Safety Certificate, Energy Performance Certificate, Electrical Safety Check, Right to Rent check and paying into a Tenancy Deposit Scheme. You’ll also need to declare the rental income for tax purposes.
We advise people considering this to not underestimate the time, energy and money you will need to invest in remaining legally compliant.
- If things go wrong
Planning for every eventuality when you’re thinking of investing in buy to let is very important. From nightmare tenants to broken boilers – lots of things could go wrong and you’ll need to have the right processes in place to deal with them.
Banner Jones have a team who can not only assist with the property purchase itself, but we can also help with a tenancy agreement to start you out on the right foot. Should you need it, our Dispute Resolution team can also help with any recovery of rent arrears, breaches of tenancy conditions and eviction notices if it came to that.