Despite rising house prices, today’s property market can still offer cheaper properties, providing the ideal investment opportunity for any budding landlord.
But choosing to rent out a property isn’t a decision to take lightly. There’s a lot to be aware of and think about. To make things a bit easier, we’ve listed some of the key points you need to keep in mind when deciding whether or not to become a landlord.
What sort of landlord? – Do you want to let privately, as part of a group owning a building, or do you want to let to professionals, families, even students, perhaps? These decisions not only influence the sort of landlord you will be, but also help guide your choice of property and finding the right investment for you.
What sort of property? – This ties into, but also influences, the above point. Knowing what types of properties you prefer and, more importantly, are within your budget – a flat in the city, or a semi-detached in suburbia, for instance. This also helps you decide what sort of tenant you’d like to let to.
Stamp Duty – Stamp Duty laws have changed: since 1 April 2016, higher charges have been put in place on houses and apartments bought as additional properties. This includes second homes and buy-to-let properties, meaning you should expect to pay more to invest in a property you intend to rent out. You can learn more about the changes to Stamp Duty on the Gov website.
Insurance – Landlords’ insurance is an essential requirement, as it protects you against damage to your property. The cover can also protect the contents of the property if you let it fully furnished.
What is included in the rent? – This will impact how much you charge your tenants in rent and can affect how much profit you make. Are you just including main energy costs like electric, gas and water bills? Or are you adding additional costs like TV licensing or Internet fees?
Maintenance? – One major additional cost can be maintaining your property. It’s wise to know if you’re able to do the maintenance work yourself, or if you’ll need to enlist the services of a property management company to carry it out on your behalf.
The final point to consider is legal costs and processes you will use to protect your property. If a tenant damages the property, or misses a payment on their rent, for instance, should you factor in additional costs to help rectify the problem?
It’s wise to be absolutely sure about decisions like these, as they should all be included in your official tenant contract. It’s also a good idea to speak to a financial advisor to know how to set this out.
There’s a lot to consider when it comes to being a landlord – predominantly the financial implications the role can bring. That said, choosing to let out a property and help provide a happy home life for a tenant or two, can act as a challenging, but satisfying, second job, paving the way for an enjoyable and lucrative career too.
This post was produced by Red Rose Property Management, a sales and letting agent based in the North West.