This is part two of a four-part series, forming the Ultimate Guide to Buy to Let. Click here to read part one which explains buy to let mortgages and accompanying fees.
What Type Of Property Should I Buy?
Usually when you are looking to buy a property, you are looking for your ideal home. Somewhere that you want to live yourself, which suits all your personal requirements. The same can’t be said when looking for a buy-to-let property. This takes some “outside the box” thinking because you are not looking for something desirable to you, you are looking for something that best serves your preferred choice of tenant.
Spend some time thinking about who you want to let your property to and then align your search with their prospective wants and needs. It may be that you can find something suitable that is local to you, but then there are a great many of investment opportunities all around the UK and beyond, so it is worth checking out the current “buy-to-let hotspots” if you want to look further afield. There is a wealth of information about what areas are delivering great returns, so make sure you take some time over your decision. Speaking to an advisor with expertise in this area is always a plus when it comes to starting your search for that perfect property.
A choice that remains popular with investors is that of student properties. Choosing a location that is in close proximity to universities and transport links will all but guarantee a steady supply of tenants looking for rental properties. Some landlords may have concerns about the unreliability of young student tenants, unpaid rent or possible damage to the property. For this reason, purpose built student accommodation that is managed by a lettings agent is becoming more and more popular. The drawbacks of the student market are mostly dealt with by the agents who will ensure there are suitable deposits in place, as well as guarantors if necessary. They will also be able to vet potential tenants using referencing services which can lessen the chances of having to deal with problem tenants.
It may be a cliché but there is so much truth in the old adage “Location, location, location”. The location of your property is the single most important thing to consider. It is best to choose a town or city with a thriving economy, vibrant local culture and excellent travel links to major destinations. A strong and stable economy means plentiful jobs, which attracts many professionals looking for work and a place to live. These place will see house prices rising which is only ever good news for property investors.
Locations with house prices that are below the national average but expected to rise are another excellent choice. One such area of the UK is The North. With many cities benefiting from increased investment and development due to the Northern Powerhouse Agenda, there are some fantastic locations for investors looking to buy. Some examples to consider are Leeds, Sheffield, Liverpool, Manchester and Gateshead.
There are few restrictions on the types of properties you can invest in so it is best to ensure you explore all avenues to see just how many interesting opportunities there are available for the right investor.
What Are My Responsibilities As A Landlord?
When you become a landlord, you take on many legal obligations and responsibilities. From ensuring the habitability of the property to making sure it conforms to regulations, there’s a lot to remember. Here is an overview of your different responsibilities:
- You must make sure all tenants have a Right Of Residence allowing them to rent property in the UK.
- Ensure the building is habitable and free from health hazards. There must be no structural, insulation, air quality or asbestos problems, with appropriate certification if required.
- All gas and electric installations must be completed to British safety standards. You must obtain an Energy Performance Certificate as proof of this. These need to be renewed after a set time so always make sure the one you have is currently valid.
- Fire precautions are extremely important. There must be adequate fire alarms and clear escape routes.
- Always supply your new tenant with an up to date inventory and any rules you may have clearly laid out for them. All landlords worry about bad tenants or damage to their property. Making sure you make tenants aware of their responsibilities can help to lessen these worries and hopefully build a good tenant/landlord relationship. You could even supply them with a copy of the government’s “How To Rent” guide, to make sure they know everything that is expected of them as tenants.
- If the tenant makes you aware of a problem that is your responsibility, make sure you take care of it as quickly as possible. This is especially important when it comes to problems with the electrics of gas installations. In case of an accident you could be charged with negligence and receive a criminal conviction.
What Is Buy-To-Let Insurance?
Buy-To-Let insurance is also called Landlord’s insurance, and it is different from normal household insurance due to the added risk of a third party (i.e. your tenant). For this reason it is likely to be more expensive.
Most typical insurance plans will include damage against fire, flooding or any structural damage. Different types of properties will have different needs so make sure you shop around with different insurance providers to find one that is most suitable. Some plans may have special offers or add-ons that would suit your property better than others.
Some possible extra policies include landlord liability insurance, which will provide cover if a tenant is injured in your property and holds you responsible. You can also get rent guarantee insurance, and cover to help with legal costs should you ever have to deal with a tenancy agreement dispute in court.
Contents insurance is something else to consider. This covers damage to any items within the property such as furniture and electric appliances. If you are letting out an unfurnished property then it is likely the tenant will take out their own policy as they will be the owners of anything that needs to be covered. However if you are looking to rent out a furnished property then it is important to investigate options for your own cover. As with landlord’s insurance, rates may vary from personal contents insurance due to third party risk.
Click here to read part three of the Ultimate Guide to Buy to Let which looks at the benefits and costs of using an agent, as well as the tax considerations when investing in a buy to let property.