Before you embark down the buy-to-let road, it’s important to clearly understand your responsibilities, both financial and operational. Below we have listed 4 key considerations to help guide your decision making.
1. Understand the financial implications
The financial implications of buy-to-let can be far reaching. Let's take mortgages for example, it is likely that letting your home will void the terms and conditions of your original mortgage agreement. Talk with your mortgage provider to discuss your options, you may need to pay a higher rate of interest or switch to a buy-to-let mortgage. Other financial implications include additional tax (Capital Gains and Income), agency fees, and repairs and ongoing maintenance. If you don’t live near the property, factoring in the cost and time to visit is also important.
2. Going it alone – Understand your responsibilities
If you decide to go it alone, without using an agency, you need to be fully aware of your legal responsibilities. Some of these include: supplying a legal tenancy agreement, ensuring all safety certificates are in place, and that certain furniture is fire-resistant. With your tenants’ deposit, this must be registered with the Tenancy Deposit Scheme. You can learn more about all the responsibilities in the links at the bottom of this article.
3. Do your research
The location of your property will strongly influence the type of tenant you have. You can investigate this yourself by looking at the services in your chosen area; Are you near schools? Are you near a university? Do you know anyone living in the area that can give you an insider’s perspective? All of these can give you a strong indication of what to expect from your buy-to-let experience.
4. Contact an agent
The benefits of going with a letting agent are plane to see. An experienced and competent agent that manages your property and tenants’ will save you time, and often also a significant amount of money. From collecting rent to providing better value on emergency repairs, the value of peace of mind should not be overlooked. The flipside of course is the letting agent fees, these can typically be around 15%, and will cut into your profit. We recommend talking with a few different letting agents to gauge the range of services offered. Additionally at this point you should talk through what is and is not included in the agency fees.
There is a great deal to consider when looking at a buy-to-let property, however if the above points are considered you should be in a strong position to decide if this is right for you.