Whether you’re a first-time investor wanting to create your own landlord portfolio or if you’re looking to expand upon your existing property investments, having the right knowledge at the right time is a priceless addition in making the best decision for you and your return.
We’ve put together some tips on what to consider and look out for when contemplating your first or subsequent buy-to-let purchases.
Understanding Your Buy-to-Let Mortgage
This type of mortgage is sold specifically to people wanting to buy a property to invest in rather than a place to live. If your plan is to be a landlord and to retain tenants within a property then a buy-to-let mortgage is recommended should you require assistance to finance your purchase.
Do Your Research: Buy-to-Let Mortgages
These types of mortgages are generally more expensive than a typical mortgage with deposits required around 25-40%. However, they can be a great resource in enabling first time and seasoned investors access to this market and growth within it.
Know Your Finances
Have your finances in order before you begin and look at the realistic rental yield and capital growth to know what to expect each month and what return over time your property is likely to gain.
The rental yield is what to expect each month from a tenant and the capital growth is what the property will accrue in financial value over time.
It’s always important to contemplate regional differences as prices and rents for properties will vary from town to cities and across the UK.
Where and What Are You Looking For?
Doing your due diligence and researching what you plan to invest in and where is vital to any search. Knowing before you commence offers focus to what you will consider as the right investment purchase for you.
It’s a good idea to think of things such as;
- Desired areas and why?
- Are you going to use an agent to help manage your portfolio?
- And are you looking at new build properties, off-plan or resale residential homes?
Your Legal Responsibilities
The Tenancy Fees Act as of 1st June 2019 stipulates by law what a lettings agent/landlord can charge a tenant.
It’s always advisable to be abreast of what you’re responsible for and also to understand what you can reasonably charge your tenants. This covers things such as; holding deposits, deposits, changes to tenancy agreements, costs for replacement keys/security devices and utilities etc.
It is also a requirement to ensure the property stays in good condition, gas safety is installed and maintained by a Gas Safe registered engineer, smoke alarms and carbon monoxide alarms are fitted and that working order is constantly maintained alongside the supply of safe electrical equipment like cookers, kettles, switches and light fittings etc.
Immigration Act: Right to Rent
The Immigration Act requires you as a landlord to ensure your tenant has the right to rent in the UK by taking a copy of their original ID documentation and a visa if it’s required for them to be in the UK within 28 days of granting tenancy.
It’s always prudent to ensure you can cover not just any mortgage payments but that of additional costs you’ll come across as a landlord. Plan for the everyday, such as insurance premiums and letting agency fees but also plan ahead for unforeseen costs and void periods where you may not have a tenant and for those repairs and where maintenance may well be needed too.
Take Professional and Specialist Advice
Taking professional advice from established and trained estate agents is advantageous to help prevent any potential pitfalls you might come across throughout the process. Gain the support you need and talk through our services on how we can best assist and work with you when purchasing your next investment property.
Whether you’re a first-time buy-to-let investor or if you’re looking to expand your current portfolio, at CSB we’re here to work alongside you and to help you forge ahead to locate the right property match for you in Pendle and the surrounding areas and to meet your investment needs.
At CSB we understand that a home is more than just a home and we know that buying and selling is more than just bricks and mortar to our clients.