Thinking of becoming a landlord? Here’s what you need to know.
Embarking on the journey of becoming a landlord is an exciting venture, but it comes with a set of responsibilities and costs. The rental market in the UK is robust, with one in five households privately rented, presenting a promising opportunity for investment.
Explore our comprehensive guide to gain insights into the essential aspects of becoming a landlord, ensuring you are well-informed before embarking on this venture.
10 essential things every prospective buy-to-let investor should know
Here are 10 essential things every prospective buy-to-let investor should know before diving into the world of property investment:
- Do the Math: Crunch all the necessary numbers to determine expected profits. Consider factors such as stamp duty, solicitors’ fees, mortgage payments, agency fees, and maintenance costs. Be prepared for times when the property might be vacant.
- Understand the Tax: Rental income is added to other relevant income during the financial tax year. Declare this income on a Self Assessment tax return. Certain expenses can be claimed to offset against rental income, and there are changes in tax relief on mortgage interest.
- Location Matters: Ensure your investment property is in a desirable area to ensure consistent rental demand. Base your decision on market demand rather than personal preferences.
- Choose Your Rental Wisely: Opt for a property that aligns with market preferences. Consider features like ample space, equal-sized bedrooms, storage, and a decent garden, depending on the target market.
- Get Mortgage Advice: Utilise the services of a broker when seeking a buy-to-let mortgage. Many brokers offer free services, so avoid unnecessary costs. We are happy to recommend Core Mortgages who can provide FREE mortgage advice and quotes. https://www.bourneestateagents.com/buy/other-property-services/independent-mortgage-advice/
- Tenancy Deposit Scheme: Legally, landlords must keep a deposit in an approved scheme. Failure to comply can result in legal proceedings and fines.
- Extra Obligations: Obtain an Energy Performance Certificate (EPC), Landlord Gas Safety Record and Electrical Installation Condition Report in accordance with the government timelines. You will need to provide tenants with the latest version of the government’s How To Rent Guide.
- Compliance: there are many mandatory requirements to being a landlord, especially around Heath & Safely legislation. As the law is often updated, you need a process to stay ahead of all compliance matters. (https://www.gov.uk/private-renting/your-landlords-safety-responsibilities)
- Get Covered: Standard home buildings insurance may not cover tenanted properties. Inform your insurer about tenants and consider additional coverage such as landlords’ liability, contents and loss of rent cover
- Using a Letting Agent: Choosing the right tenants is crucial. Ensuring the set up and ongoing management of the property is also crucial, to help you stay on the right side of compliance and protect your investment. By working with a reputable letting agent you are maximising your opportunity for a successful venture and minimising your risks.
Navigating the buy-to-let landscape requires careful consideration and adherence to legal and financial obligations. However, with thorough research and help where needed, becoming a successful landlord can be an achievable and worthwhile goal.
At Bourne, we have local Lettings Managers and Directors with a wealth of lettings experience, who can help you understand how to select the best investment for you, with the right level of on-going management and advice on getting the most from your investment. Whether you are looking to invest in a new property, or rent out an existing property, feel free to arrange a no-obligation chat with one of our team.
We’d be delighted to help you with your new venture.
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