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Becoming a Landlord
You may be considering letting for a number of reasons. Perhaps working overseas for a number of years and want to retain a stake in the domestic UK housing market. Perhaps you have recently inherited a property or you may be one of a growing group of people who view property as a key element to their investment portfolio or pension plans.
Whatever the reason to letting, the private rental sector has never been more attractive. Recent legislative changes have removed many of the uncertainties associated with letting, so you should always be able to regain possession of your property. There are precedents and grounds in law which mean the courts must award possession to a landlord.
Financial returns from letting has significantly improved due to the return to real growth in property prices. While the growth patterns do fluctuate with market conditions the availability of buy to let mortgage schemes and the ability to offset many cost associated with lettings. Letting can provide both income and capital growth.
Strong economic growth over the past 10 years and an increasingly mobile professional workforce, corporate relocations and an ever transient population combined to ensure a strong demand for rental property in this geographic region, thus ensuring you have minimal void periods between lets.
Contact Hardings today for a landlord Guide
Buy to let mortgages offer homeowners the opportunity to purchase additional properties which they can use to rent out to tenants. This additional investment can be used as an extra income or as a future asset. So is buying to let rightfully you? Take a look at the brief guide and find out how you can get the best return on your buy to let investment.
Why it buy to let?
Overtime, property is a sound bet for a good return on investment home you purchased 10 years ago is likely to have doubled in value today.
Investing in property therefore, can be a worthwhile investment and if you rent out the property you’ll be able to keep up mortgage repayments.
With more people renting rather than buying you should not have much trouble finding tenants, but it is worth checking beforehand that you have not purchased a property in an area that has more supply than demand.
Investment and income
Essentially, purchasing and additional property is an investment, which means you must decide whether you want that investment to grow or use it as additional income. If capital growth is your primary goal then town and city centre locations can offer high levels of return. However, as the majority of rental properties are concentrated in city centres, competition for tenants is usually higher.
If you are looking to use the rental property as a vehicle for additional income, then consider suburban areas where properties will generally be cheaper and the rent is lower, so relative returns are likely to be greater over the long term.
The Association of residential letting agents estimate that as a landlord you should be able to claim gross rent equivalent to between hundred and 30% and 150% of the properties mortgage repayments (interest only).
Professional letting agents normally charge around 10 to 15% of the agreed rental income but this can vary subject to the work you ask them to do. It is advisable to budget for this when you make your initial purchase and set your rental figure.
When deciding on a letting agent you must ensure they are members of a recognized body such as the National Association of estate agents or National Federation of property professionals. Your agent is also required to register with a tenancy deposit scheme which will protect not only your rental income but also your tenants deposit should the agent can into liquidation or misappropriate these funds.
As a new landlord your daily responsibilities will largely depend on the level of responsibility and work you agree with the letting agent. However, as the owner you will be responsible for the properties upkeep as well as building and contents insurance.
You must also make sure that any gas or electrical equipment passes safety checks and complies with the relevant regulations. Remember too, that maintenance costs such as cleaning and gardening and you’re letting agents fees can be offset against your tax liability.
Whilst there is no doubt that buying a property to let can be a worthwhile investment option, it is important to remember that buy to let can also carry an element of risk.
You need to make sure that your mortgage repayments are kept up to date. The rental market may be buoyant but in must still consider the possibility that from time to time you may have no tenants.
You also need to consider the condition of the property. It may be cheap to buy a place in a rundown area that needs renovation, but it could be expensive to refurbish. When you look to sell a property in the future you may not get the return on investment you expected. As a valued client of Harding’s if you decide to do so your investment property Hardings will guide you through the sales process and offer a discount in our usual sole agency fees.