We’re always told that, when it comes to investment, the smart money’s on property; something that became apparent with the introduction of specialist buy to let mortgages in the 1990s. There’s no doubt that property is still a sound investment but, with increased regulations and guidelines, is buy to let still all it’s cracked up to be? We’ve put together our guide to everything you need to know before embarking on a buy to let purchase.
Put simply, buy to let is the process whereby an individual purchases a property with the intention of letting it, rather than using the property themselves. The aim of this is to fill the property with tenants who will not only cover your mortgage payments but will also make you a tidy profit on top of that. Sounds like a good idea? Before launching into a buy to let project, you’ll need to make sure that you fit certain criteria:
To purchase a buy to let property, you’ll need to obtain a buy to let mortgage. Although the BTL mortgage works, in principle, like a regular mortgage there are some differences, most notably that fees, interest rates and deposits tend to be a fair bit higher than normal mortgages. In order to quality for a BTL mortgage, you’ll usually need to prove that:
- You are below the age of 75
- You already own a residential property (whether or not the mortgage is now paid)
- You can afford the repayments
- You don’t have any criminal convictions
Once you’ve been granted a buy to let mortgage, you’re on your way to becoming a landlord but, slow down there – there are a few things you need to know:
Landing on your feet
It may be stating the startlingly obvious but, owning a property which you let out to tenants makes you a landlord (told you it was obvious!). As the landlord of a tenanted property, you automatically become responsible for a number of things including:
- Making sure that the property is fit and safe for habitation
- Maintenance of the property
- Inspections of the property
- Thorough vetting and monitoring of tenants – including a responsibility to report suspicious activities and those possibly linked to terrorism.
Not a thing to be take lightly, being a landlord can be a full time job and, unless you want to pay a real estate agent hefty fees, you’re the one that’ll be receiving those 4 am calls telling you that the toilet’s stopped working.
If that hasn’t put you off then, this might.
The money stuff
In an ideal world, your buy to let property will be instantly filled with upstanding citizens who want to sign up to 10 year leases. Unfortunately, this is rarely the case – tenants, by their very nature, tend to be transient and can often give notice on a property quite suddenly.
The naked truth is that, whether your buy to let property is occupied or not, you are still responsible for paying the mortgage and bills. To that end, it’s incredibly important that you are confident that you will be able to cover these costs even if the property is empty for a while.
A new lease of life
It’s not all doom and gloom though. Financial experts have predicted that 2019 may be the ideal time to invest in buy to let properties.
If you feel you’ve got what it takes to become part of the buy to let crowd, there are a few things you can do to improve your chances of success:
- Location – When choosing a buy to let property, make sure that it’s close to good transport links and amenities.
- TLC – Make sure that your property is as attractive is possible to potential tenants.
- Rent – Research similar rental properties in the area to make sure that the rent on your property is competitive.
Tools of the trade
If you’re still convinced that the landlord life is for you, start by researching buy to let mortgages to make sure that you get the best deal possible as rates can vary. Once you’ve signed on the dotted line and secured your buy to let property, put together a folio of tradesmen in the area including plumbers, locksmiths and pest control agents so that you have this handy.
Buy to let can be a great investment – and can even provide a significant retirement fund – do your research and be prepared for every eventuality (including tenants calling in the early hours because they’ve locked themselves out) and you won’t go far wrong.