Buy To Let Advice

Considering buy to let and taking the leap into becoming a landlord? Our haart buy to let tips provide you with everything you need to know before making your investment.

Be sure you know what investing in a buy to let property involves

It can be easy just to think of the rental income, but investing in a buy to let property is a business decision. Can you afford the mortgage payments? If you are managing the property yourself can you deal with the stress this may involve? What is the market like – are house prices rising? Are your planning to let the property in the short or long term?

Sign up today to be among the first to know about property for sale or to rent in your area.

Make sure you understand the tax implications

The profits from renting property are taxable but you will be able to offset some of the costs you incur as a landlord against tax. You will have to pay the following taxes:

Income Tax
Stamp Duty (when you buy your property)
Capital Gains Tax (when you sell it)

You can find out more about the taxing of income from rented property in the Property Income Manual published by HMRC.

Familiarise yourself with buy to let legislation

Landlords have to comply with a wide range of legislation, much of which has changed in recent years, especially relating to tenants’ rights. Keeping up to date with the latest regulations and best practice will make you a better landlord and your properties more attractive to tenants.

Electrical safety standards – the new electrical safety regulations came into force in April 2021 and mean landlords have to ensure that all fixed electrical installations and wiring is checked and tested by a qualified electrician
Right to Rent – landlords need to check if a prospective tenant has the legal right to rent a property in England. This usually means checking passports and ID documentation to confirm a tenant’s immigration status
Eviction rights are changing – reform is promised on issues affecting tenants such as Section 21 notices, so make sure you know the current legislation before preparing a tenancy agreement

Understand rental yield

How much rental yield you make will determine if your buy-to-let property is sustainable. This is how to calculate the rental yield –

Divide the annual rental income by the amount the property cost + any renovation/refurbishment costs, multiplied by 100

The percentage figure you are left with is your rental yield. It is generally thought that 7% is a good yield to aim for. This should give enough cash flow to cover the mortgage and maintenance costs, and deliver a reasonable level of profit.

Make sure you know about tenant demand

Do you know where most demand is coming from in your local area? Are families the biggest market for rental properties, single people or young professional couples? This will influence your property search. Research the market conditions thoroughly as charging too high a rent will put off prospective tenants.

Consider all the costs including landlord insurance

What will your costs be? As well as your mortgage payments, you will need to cover the following costs:

Buildings insurance
If your property is furnished you may wish to consider contents insurance too
Costs associated with maintenance
Periods when you are receiving no rental income because the property is empty or the tenants have fallen behind with their payments
Increases in your mortgage repayments due to a rise in interest rates, which you may not be able to recover immediately from rental yields or rent increases

Make sure your buy to let mortgage deal is fit for purpose

Which mortgage best suits your present and future needs? Speaking to our mortgage partner Just Mortgages will help you find the right mortgage. Your mortgage advisor will prepare a mortgage illustration, with full information about the repayment costs and any other charges and terms.

Research which properties are easiest to let

Is size important? You need to consider buying a property whose size is attractive to people looking for rented accommodation in that area. What size of property is in short supply? Knowing this information is important as it will help you understand what kind of accommodation will be easier to let.

Do your research and be open-minded about location

Do you know the local area? Will it be popular with prospective tenants? You need to carefully research the area where you want to buy your property. You can either do this yourself or employ a specialist letting agent to help you.

If you decide to do it yourself, you will need to speak to local estate agents, employers and the local authority. Local newspapers are also an excellent source of information about the demand and supply of rented housing.

Pick low-maintenance properties

Is the property in good condition? Managing the property will be easier if it is well maintained and will be much more in demand than one that is run down. Therefore a newer property may be more suitable if you have limited time or no interest in DIY.

Consider a lettings agent to manage your property

Managing the property yourself can be challenging – you will have to deal with all the maintenance issues and any disputes with tenants. Being on constant call might not be for everyone.

At haart we offer a range of lettings packages. Landlords can choose from:

Full management – haart looks after every aspect of the letting experience
Rent protection – we will advertise the property, conduct viewings and reference checks on tenants and prepare tenancy agreements. We manage any rental arrears, provide monthly and annual statements.
Let only – advertising, viewings, reference checks, tenancy paperwork. Landlord would deal with all rent arrears, disputes and maintenance issues

Contact your local haart branch for help with your buy to let enquiry

To find out more about Buy to Let options, contact your local branch. Our property management experts will be delighted to talk to you about lettings packages, mortgage deals and the rental market in the local area.