When investing in buy-to-let, especially if it’s your first time, the most important thing to remember is to communicate with your estate agent. The questions you will need to ask are different to those of a stand house-hunter. Here are some important and factors to keep in mind.
Freehold or leasehold
If you are buying a leasehold, make sure to check what you annual service charge will be. This is extremely important to factor into your calculated yield. For apartments, landlords are liable for the annual service charge. If you are not aware of this, this could quickly eat into your returns.
Additional to what the service charge is, it’s important to learn what the service charge covers. Will large-scale repairs and maintenance be charged separately? Are you covered as a landlord during times of disruptive work?
If your aim is for a medium to long-term investment return, make sure you find out the length of the lease.
Previous rental experience
Ask for a full schedule of the properties rental history. This should include the current tenancy, and details of their deposit protection scheme. From this you can get a feel for the kind of tenant that has been attracted to your property in the past, and what this might mean for the future.
Learning whether there is a good rental demand for your property will shine light on the amount of hassle you might be in for. Look at the local letting agents, how much they have been renting similar properties for, and what the demand has been.
Is the area safe and desirable?
Get a feel for the area, and the type of tenant this will attract. A great way of doing this is by looking at local shops, schools, amenities. Transport links and distance from universities is also an important consideration. Local demographics tell you a great deal about who is attracted to your area.
Within the local area, ask your agent and look online for history of regeneration and notice of up and coming works.
What is important to you?
Think about what’s most important to you from your investment; are you looking for a long-term capital increase, or is your focus more on the size of yield. Maybe the financial side of things is less important than the hassle-factor. Areas around universities can yield higher monthly returns, however the potential for difficult tenants and unexpected costs goes up.
The final thing to consider is energy efficiency. The law in April 2018 is changing, with properties that have a poor energy rating being required to be upgraded. Knowing your energy efficiency will save you from any unwelcome surprise next year.
You can read the full article at the Guild of Professional Estate Agents.