Buying a house to rent is tempting if you can afford it; you make the initial investment and someone else pays off the mortgage. Letting out a property can be a great way to supplement your pension as well as promising the possibility of a nest egg if you sell the house later on. But being a landlord is also a big responsibility. Here’s what you need to know.
How do I find the right property?
Choose property in an area you can afford and a property you think will attract interest from the kind of tenants you’d like. Good commuter links will attract young professionals, good local schools will attract families
and houses situated near a campus will suit students.
Once you’ve found a property, have a survey done to check for problems. You might be able to negotiate a discount on the price as not having another house to sell makes you less of a risk.
What do I need to consider before buying?
Can you afford it? You can buy a property to rent with cash or with a buy-to-let mortgage. The size of the mortgage you get will depend on how much rent you plan to charge. Check local listings and speak to letting agents for reasonable prices. Which? offers independent advice on buy-to-let mortgages, call 0808 149 1922.
Remember, you’ll have to pay income tax on your rental house, minus your day-to-day running expenses, and you’ll need to be able to manage financially if the property is empty between tenants.
How do I find tenants?
The easiest ways to find suitable tenants is through a lettings agency which will advertise the property and vet prospective tenants for a percentage of your rent. Check that your agent belongs to a professional body such as the National Approved Lettings Scheme (NALS) or Association of Residential Letting Agents (ARLA). If you find tenants yourself, ask for references from their employer and previous landlord before they move in.
How do I protect myself?
- Get a landlord’s insurance policy and check you’re covered against fire and water damage.
- Ensure both you and your tenant sign a tenancy agreement. Many stationery shops sell them or you can download one from www.gov.uk
- Make an inventory of everything in the property and its condition for the tenant to sign.
- Ask tenants for a guarantor if they are students or if you’re concerned about their ability to pay the rent.
All landlords have to:
- Keep the property safe and free from hazards.
- Make repairs to the structure and outside of the property as well as sanitary fittings, heating and electrical wiring.
- Make sure all gas and electrical equipment is installed and maintained by a Gas Safe registered engineer.
- Follow fire safety regulations, such as checking fire escape routes and providing alarms.
- Provide an Energy Performance Certificate for the property.
- Respect the tenant’s privacy and only enter the property with written notice, except in emergencies.
- Keep the tenant’s deposit safe in a government-approved scheme such as the Deposit Protection Service (www.depositprotection.com) or Tenancy Deposit Scheme (www.tds.gb.com).
There's more consumer advice in every issue of Yours magazine, out every fortnight on a Tuesday.