With some first-hand experience from one of Leaders’ multi-landlords, here’s five top things to keep in mind in the current buy-to-let market.
1. Don’t be afraid to diversify your portfolio
It’s important to consider what type of properties are most popular with the tenants settling in your chosen area. It’s a common misconception that the best rental yields come from shiny new apartments. However, there is always demand for a variety of housing, including family homes, flats and student accommodation, so it’s good to keep an open mind.
If you’re unsure which type of property to purchase next, ask your local Leaders lettings agent for advice. Tenants are often attracted by locations with plenty of employment and social opportunities, or good transportation links for commuting to nearby towns and cities.
The Royal London reports that almost half of babies born in the UK are starting their lives in rented accommodation, translating to a 94% surge in the number of families with children who are renting since 2009. This is an excellent opportunity for landlords to capitalise on a different market – rented accommodation is becoming a long-term housing solution for young people, meaning they are increasingly likely to begin families while still renting, so the demand for family-sized homes is high.
2. Consider letting to tenants with pets
It’s surprising just how few pet-friendly rentals are available on the market. Whilst some homes will naturally be unsuitable for these additional occupants, demand is high.
With 44% of UK households currently owning a pet and the private rental market increasing year-on-year, landlords who buck the trend in allowing four-legged-friends instantly increase their chances of attracting long-term, trustworthy tenants. Additional benefits include potential willingness from tenants to pay a higher rent, added security with a higher deposit and often more careful tenants, who won’t want their pet negatively impacting their good tenant reference.
One of our multi-landlords, comments, “Many of our tenants value being able to have a pet, so it’s important to bear this in mind when considering your target tenant demographic, especially if your rental property is a family-sized home.”
Leaders’ standard deposit is increased by an additional two weeks’ rent upfront, for tenants renting a property with their pet(s).
3. Stay up-to-date with what tenants want from a rental property
You might think you already know what tenants want from a home, but it’s always worth researching whether your hunches are correct. According to GoCompare, 60% of tenants think it’s important to be able to furnish their own home, 23% want or need to be close to good schools and 18% say that access to a gym or pool is important. Research also shows that perhaps unsurprisingly, nearly two thirds (61%) of tenants valued affordability above all else when choosing to rent, followed by location (23%) and size (10%).
From this, it’s clear that tenants look for value for money, so clean and modern living in close proximity to key amenities is a must. In addition, it’s important to consider that not all tenants want a furnished property and that location really is important.
Our multi-landlord adds, “It’s imperative that you keep up to date with what local tenants expect, want and need from a rental property. For example, if you don’t keep your property in a good, clean and modern state of repair then you cannot expect to attract (and keep!) the best tenants, or achieve the best rent.”
4. Review your finances regularly
With around one third of all home loans made in the UK being mortgages, streamlining your debt and keeping it under frequent review is a hot topic. There’s a common misconception that remortgaging is expensive, but it doesn’t have to be.
“With mortgage lenders cutting interest rates and offering incentives such as cashback on remortgaging deals, now could be a great time for landlords to consider refinancing their buy-to-let portfolios,” explains Leaders’ Group Financial Services Director, Mark Hughes.
“As the property market continues to change and with investors facing the prospect of slimmer profit margins, many of these products focus on reducing the up-front costs of remortgaging or saying ‘thank you’ through means such as cashback.”
5. Keep your eyes peeled for deals
Lettings’ Managing Director, Michael Cook, advises that it’s not only mortgage deals that landlords ought to look out for, “A recent downturn in house prices in some areas of the country means that some savvy investors are able to secure deals on properties at 10 – 15% lower than at their peak, but retain some very strong yields.”
Savvy landlords should be open to varied methods of property purchase. Contrary to the common perception of auction sales being reserved for tired and dated properties, many investors could walk away from room auctions with additions to their portfolios offering rental yields of over 8%, demonstrating a successful alternative method of property purchase for landlords.
Our multi-landlord adds, “Success in the buy-to-let market comes down to making a profit, so buying the right type of property for the local rental market is essential. Buy-to-let is still a growing market – tenants are staying longer in a property and more families are renting, so keeping your eyes peeled for good property deals will not only offer you more potential profit over time, but will help to diversify your portfolio, too.”
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