More people than ever are owning a second home and becoming landlords for the first time. Charles Gordon of Credence Property Services takes us through his top ten tips for success
Hot spot Areas Look for an area that has a high demand for rental properties. A property which can not be rented or stands empty for months is a poor and often costly investment. Seek out areas which are currently undergoing improvement and regeneration as this can add thousands of pounds to the value of your investment. Planned new extensions to the London underground have recently created hot spot areas in Penge, Anerley and Woolwich.
The Property Research carefully the average rental price in the area, for the kind of property you are going to rent. This will give you an indication as to whether the rental income gained from your investment will be enough to cover the mortgage. Remember only top quality properties yield top end rents
The Tenant Consider carefully the kind of tenant you would like and the financial and legal implications of this. Some insurers will refuse to insure you if you rent your property to a housing benefit or social security tenant. In this case you will need to approach a specialist insurance company
Bad Tenants Protect yourself as far as possible from poor paying tenants and those that are destructive to property by doing your research and insisting upon references.
Extra insurance against tenants Use an insurance plan such as Let Plan, who for a small fee will take on the reasonability of the tenants payments and can cover landlords liability, rent guarantee and legal expenses.
Tenancy Agreement The more specific the agreement the better you will be protected. A basic agreement will protect you in law but it won’t cover you for any specific standards you may require. If you desire particular maintenance of your property such as regular mowing of the lawn then make sure you specify it in the agreement.
Professional Advice Don’t go it alone, take time effort and professional advice in order to familiarise your self with tenancy law. It is a logistical minefield and mistakes in the area are extremely costly.
Building Insurance Check your buildings insurance carefully before letting out your property to a tenant. Renting can often invalidate your buildings insurance so always ensure that you have valid insurance
Mortgage Investigate your mortgage thoroughly, and ensure that it allows you to rent your property. A buy to let mortgage allows for this but most residential ones do not. When budgeting take into account that changing a residential mortgage to a commercial one can raise the cost by about 1% or approx £100.00 per month
Eviction of Tenants If it gets to this stage then ALWAYS Seek professional and legal advice before proceeding. Evicting tenants is a complicated and bureaucratic process and the success of your eviction could hinge on something minor such as whether you served the right notice on the right day or not.
Credence 020 8698 6000
credence.ltd.uk