Landlord top tips
Location, location, location
It goes without saying that the location of an investment property is key, as you might find it trickier to let if it is in a place with low demand. Whether you are looking for your first buy-to-let property or are aiming to add to your portfolio, focus on choosing the right location so that you boost your chance of enjoying high tenant demand and experiencing only short void periods between tenants. Transport infrastructure, local employers, universities and other factors that lure people to the area should all be taken into account.
Improve a property for the highest rental returns
Your aim should always be to attract the very best tenants at the highest rents, and one of the most effective ways to do this is to invest in home improvements. The quality of the property you offer can have a huge impact on your rental income. So, while a new kitchen or bathroom might seem like an expensive project, it can help you to increase rents by £100 to £200 extra each month. As such, a £5,000 investment can be recouped in as little as two years.
The price is right
Asking price is arguably the most crucial factor when it comes to letting a property. Set it too high and you will likely end up with a void period, but go too low and you will fail to maximise your return. If your property is worth £800pcm but you opt to place it on the market for £900pcm, missing out on just one month's rent as a result is equivalent to simply asking for £844pcm over a year, so being greedy is a plan that can easily backfire. A good letting agent should be able to inform you of the perfect asking price for your property based on factors such as its location, size, décor and the current market conditions.
Get the right advice
When it comes to letting a property, you should view the whole process as a business transaction. As such, you need to be fully aware of the legislation surrounding the industry and keep up to date with the frequent changes in it. You could face a hefty fine or even a custodial sentence if you do not comply with certain regulations, so make sure you are protected at all times. A quality letting agent such as Leaders will ensure you are letting in accordance with the latest legislation and advise you when the legislation changes. If you run a company you would use an accountant and when letting you should do the same as a good accountant can help save you money both on any taxable income during the time you let the property and against capital gains when you come to sell.
Don't discount tenants with pets
Almost half (46 per cent) of people in the UK own a pet, so ruling them out as tenants can mean you miss out on a selection of good tenants. While you might think your ideal tenant will not have an animal in tow, by considering such applicants you will open your property up to a much larger audience. At Leaders, we ensure that if you accept pets you will be covered by an increased tenancy deposit and special clauses within the tenancy agreement. Accepting pets does not have to mean you will end up with a small zoo in your property, but accepting a cat or a dog is well worth considering.
Consider your tenant carefully
Tenants will come with a range of circumstances and it is important to remember that everybody is different before accepting a tenant. A good letting agent will carry out referencing on applicants to check their suitability, history of renting and their ability to afford the rental payments. Taking this information into account and considering other factors – such as whether the tenant is looking for a long-term home or if they are moving into the catchment area of a certain school, both of which indicate they will stay for several years – will help you to select the right tenant.
Deal with maintenance issues quickly
It is important to consider your tenant when it comes to maintenance and the effect any delays can have on them. Whether or not you have instructed an agent to manage your property, you will need to give the go-ahead on any work that is required. It might seem as though it is 'just' a broken tap, faulty appliance or unreliable boiler, but one of the main reasons tenants have for giving notice is that they feel their home has been poorly maintained. To avoid the cost of finding a new tenant and the risk of a void period, simply ensure all maintenance and repair work is carried out as quickly as possible.
Undertake regular property visits
It is important to assess exactly how well a tenant is looking after your property throughout the duration of their tenancy, so property visits are essential. They give you a chance to see how well the occupant is treating their rented home and provide an early indication of any maintenance issues that may arise. You should always document these visits as the information can help towards a claim against a tenancy deposit, providing it is used in conjunction with a professional inventory and a schedule of condition. A good letting agent, like Leaders, will be able to offer a property visit service.
Get the paperwork right
As a landlord, there are lots of documents you will need to complete correctly and have in place at all times to ensure you and your property are protected, so it is important to understand what is required. An inventory and schedule of condition are vital in ensuring you can make successful claims against the tenancy deposit for any damage caused by tenants. The tenancy agreement must cover all of the responsibilities of the tenant and yourself, as well as protect you against relevant risks such as a pet clause in cases where a tenant has an animal. Arguably the most important documents of all are those used to regain possession following rent arrears or at the end of the tenancy, for which a correct Section 8 or a Section 21 notice is vital. These must be completed and delivered in accordance with the legislation otherwise you will be unable to regain possession even through a court of law.
Use your property to grow your portfolio
Most people invest in property with the medium to long term goal of capital gain over the period of ownership, and the more properties you acquire, the more you can benefit from this. It is therefore important to assess the equity you have in a property and how this can be released in order to help fund another purchase. For example, if you have a property worth £100,000 with no mortgage, you could take out a mortgage against £50,000 of it and use that money to pay towards the deposit on a second property. This allows you to both double your rental income and capital appreciation potential.
The potential returns on capital investment in buy-to-let can be impressive.