The return of the first-time buyer was supposed to signal the downfall of the private rented sector, wasn’t it?
The Help to Buy scheme may have opened up the mortgage market to more first-time buyers and those with small deposits, but the buy-to-let sector continues to grow.
For those yet to purchase a buy-to-let property there are many things to consider. Think about the kind of tenant you’re looking to attract. If you’re looking for a family to live in your property make sure you buy somewhere located near a good school and which has off-street parking.
“Choose a property that suits the tenant you had in mind,” says property investor and author Vicki Wusche. “Letting agents can help explain local preferences so think whether a garden, parking, local schools or public transport are the deciding factors for your tenant.”
While finances are likely to be most stretched immediately after you purchase a property this is the best time to upgrade kitchens and bathrooms as this will avoid angering tenants with building works later on and is likely to increase the amount you can achieve in rent.
Some suggest avoiding expensive decorations and quality finishes in student households as they could end up trashed by unruly tenants, but Wusche thinks those problems are overstated.
“The biggest challenge with renting a property to students is getting the timing right,” she says. “In order to prepare a property for rent in late August, you need to advertise it in spring. This means the best property to convert to a student HMO is one you already own.”
As time goes on make sure to set aside a pool of cash to help you get over any gaps in tenancies or void periods as this is a frequent error made by new landlords.
“Underestimating the task at hand is a common mistake than many first-time landlords make,” says Chris Norris, head of policy at the National Landlords Association.
“Calculating potential investment return is vital because expenditure such as repairs, letting fees, advertising fees and void periods can be costly if not factored in to the business plan from the start.”
Another big question for newbie landlords is whether to pay a management company to look after the property on a day-to-day basis. These firms can take upwards of 10% of your monthly rent but Wusche says, despite the high costs, it makes property management much easier for those holding down a full time job as well.
“If you are managing a portfolio and a full time job use a letting agent, it’s quicker and easier for just 10% per month.”
Both new and existing landlords should think ahead to the longer term too. By law every rented property in the UK is required to have an Energy Performance Certificate which rates how energy efficient a property is on a sliding scale from A down to G.
From 2018 it will be mandatory for a rental property to have a rating of E or higher.
There are relatively inexpensive ways for landlords to increase the EPC rating like making sure your hot water tank is heavily insulated or ensuring all of the light bulbs in a property are energy efficient.
Other more expensive options include replacing older boilers with a new condensing models or fitting cavity wall and loft insulation to the property to prevent heat loss, but government schemes can offer some financial support.
“There are many relatively cheap energy efficiency improvements to consider, such as draft proofing or additional glazing,” adds Norris.
“Improvements such as solid wall insulation or the opportunity to generate your own energy through solar panel installations will of course be costlier.”
Click onto the next page to see Vicki Wusche’s top tips for keeping your tenants happy.
Vicki Wusche’s top tips to keep your tenants happy
1) Supply WiFi
2) Have a cleaner in once a month to give bathrooms and kitchens a deep clean
3) Supply a vacuum cleaner, iron and ironing board
4) Respond to maintenance and repairs in 24 hours
5) Have a boiler maintenance plan or call out system
6) If you have a garden – employ a gardener to mow lawn etc. and supply garden furniture