Buy-to-let has become one of the ten fastest growing sectors of the economy, out-performing investments in either gold or the Stock Market.
Renting and sharing rented property is becoming more a matter of necessity than choice. Life has become tougher for first-time buyers to get on the property ladder leading to more people wanting to rent property. The Association of Residential Letting Agents (ARLA) says that 48 per cent of its members believe there are now more tenants than properties available helping to boost rental yield for landlords.
People are buying properties to let as investments for retirement, homes for their kids at university, to generate income, and many other reasons. Other people are forced to rent their homes for example to enable job moves. At the same time more and more people are looking to rent.
The buy-to-let market does not come risk free. Tougher legislation means more responsibilities for the Landlord. Investment decisions need to be taken carefully. Management of rented property must be done professionally if good profits are too be made.
Looking for rented property is normally done through estate agents or newspapers. Going to a reputable letting agent will save a lot of time and legwork and removes much of the risk.
Letting specialist, Zoe Serafimova MNAEA*, at Changing-home.co.uk provides expert guidance on the important considerations of buying and letting property. She advises:
1. Think carefully about all the finances. Mortgage providers tend to look at gross rents of about 130% to 150% of the monthly repayments. Calculate the purchase, improvement and running costs and balance these against the realistic rental income and the increase in the value of the property itself.
2. Fit out the property according to your target market.
3. Remember that letting it for less may well bring in more money than not letting it at all. You want to avoid having an empty property.
4. Legislation surrounds residential lettings and incorrect action can have consequences out of all proportion to the error or omission. Current health and safety regulations are strict, covering gas and electricity supply and appliances, furniture, fire safety, etc. Make sure you are fully aware of all regulations or have an expert to advise you.
5. A lease needs drawing up, with a proper inventory and condition schedule.
6. The property will need checking regularly and any problems will need action to comply with the law and the tenancy agreement.
7. Finally, seeking advice from a professional or expert nearly always proves a money-saver, which in the end is what the investment is all about.
* Member of the National Association of Estate Agents.