Profiting from property
With savings rates remaining at an all-time low in recent years, it is no surprise to find so many people have looked at alternative forms of making their money work for them.
One of the most effective is to acquire a buy-to-let property, with the potential return on these often exceeding the rewards of saving or other types of investment. And with the UK’s pool of tenants growing all the time, there is strong demand for rental properties across the country, giving those of you who become a landlord confidence that your properties will be occupied.
In addition to a monthly rental income, you stand to gain from capital appreciation should the value of their property increase over the time it is let. It all adds up to a golden opportunity, providing you have the ability to purchase a buy-to-let property and let it to tenants.
While you might look towards a property that offers significant potential in terms of capital growth so that it is worth substantially more when you come to sell it, an alternative is to prioritise properties that deliver the highest rental incomes.
In many cases, you must decide whether to chase a higher yield at the expense of capital appreciation, so every case should be managed differently and you should take all factors into account prior to making a purchase.
In some cases, you may not even have bought a property with the intention of letting it out, but as circumstances change the perfect solution is to secure a tenant and enjoy the benefits of a regular additional income.
Becoming a landlord
Unfortunately, many landlords – whether they are experienced or not – make mistakes along the way. As a new landlord, you might be more likely than most to commit costly errors, so taking advice from the start is a wise move.
The first mistake some landlords make is failing to realise the importance of researching the area in which they plan to buy a property. It is vital that you work out whether a particular rental property will deliver a good return in the long run.
An easily avoidable mistake is to not use a regulated letting agent, such as one that is a member of the Association of Residential Letting Agents and The Property Ombudsman. Those agents that are registered to such renowned industry bodies are, by definition, willing to adhere to a strict code of conduct.
With this in mind, there is no point in giving an unregulated agent a chance to let your property, as they have the potential to cost you plenty of money.
Selecting the right tenants is crucial in any successful lettings business, whether it is for a solitary property or a vast portfolio, so you should seek assistance if you are not confident in going through the vetting process alone.
It is important to provide a full inventory and schedule of condition to any new tenant, but this is a step some new landlords fail to take. Good letting agents will ensure these documents are completed and signed by all parties at the start of a tenancy.
A professional inventory and schedule of condition helps to protect you against some of the risks you face, such as damage to your property. Without an inventory you are able to claim against the tenancy deposit for damage to your property caused by the tenant, so it’s vital to have one and for it to be professionally created.
How to avoid making mistakes
Regardless of how experienced you are as a landlord, it is likely that you will make some mistakes as you start out with any new property. As such, taking advice from an expert letting agent is a wise move that can pay off significantly.
One of the most common mistakes landlords make is neglecting to research the location in which they are considering buying a property. It is crucial that you work out exactly how successful your buy-to-let property is likely to be.
It can also be foolish to avoid using a qualified and experienced letting agent. At Open House, we are a member of The Property Redress Scheme, so you can be confident we will let your property in accordance with all the latest legislation.
There is no reason to give an inexperienced or unregulated letting agent the chance to make mistakes with your property, as these have the potential to cost you plenty of money.
You will soon realise that selecting quality tenants is a huge factor in your success as a landlord. Whether you have one property or 100, you need to get it right when it comes to finding tenants – a task we can help with.
If you are not confident about going through the vetting process alone, ask us about taking on this responsibility.
Upon taking on a new tenant, you will need to provide a full inventory and schedule of condition, along with a legally-binding tenancy agreement. If you do not feel as though you are capable of meeting these demands, we are ready to help and are extremely experienced in providing documents that adhere to industry regulations.
Any good letting agent should ensure these documents are created, signed and stored securely for the duration of a tenancy.
By getting it right when it comes to the inventory and schedule of condition, you are protected against a number of the risks that any landlord faces, including damage to your property. If you do not have an inventory you are unlikely to be able to claim from a tenant, so having one created and rubberstamped by professionals is a good idea.
How can we help?
From the very start of your lettings journey, we can offer invaluable advice, assistance and services that will help you to achieve better results and realise long-term goals.
If you have not yet made a purchase, you can tap into our local property market expertise that will help you to choose the right house or flat.
Before acquiring a property, it is important to work out if there is a good supply of tenants in the local area and whether rental returns will be high enough to cover any mortgage payment. You should also think about the type of properties that enjoy high levels of demand in a particular location.
Our local experts will be able to inform you about any developments in the area that could affect the rental value of your property, such as the imminent arrival of a new and major employer or an improvement to public transport infrastructure.
Some new landlords can be guilty of getting their asking price entirely wrong, either by setting their demands too low and missing out on income or by asking for too much and struggling to let their property, so do not make this mistake. At Open House, we have more than 20 years of experience in the property market, so know exactly how to maximise your return while ensuring tenants are not put off by the price.
We also promise to complete an extensive evaluation procedure for every prospective tenant, which is designed to ensure only quality candidates are put forward to live in a rental property.
There are numerous legal requirements when letting a property, such as having to place all deposits in a government-backed Tenancy Deposit Protection Scheme. Open House takes the strain off you by meeting all the legislative demands placed on rental property owners, giving you peace of mind and confidence that every regulation is being adhered to.