With “generation rent” currently on the rise, now is a great time to have a serious think about becoming a landlord. There are currently 5.4 Million homes in the UK that are privately rented, and this is set to continue to rise by another 1.8 Million by 2025. This being said, being a landlord is not all sunshine and rainbows – there are some very important considerations to make, not only from a legal standpoint but also from a financial investment point of view, as after all you want your investment to be profitable. Here is a quick guide to the important things you should look to consider before becoming a landlord.
Would you rent your current property or purchase a buy to let?
If you do not want to rent your current property, speak to a financial advisor and discuss purchasing a buy to let property. This will generally require a 25% deposit, unlike if you were to buy a home for yourself. It is important to do plenty of research and speak to an estate agent about the potential yield that you could expect to make on the property, to ensure that it is a worthwhile investment.
What is renting like in the area?
Speaking to a trusty estate agent, and doing your own research – try to establish what the current rental market is in this area, and if it is in high demand. As soon as you have purchased your property, you will want to get renters in as soon as possible and it is important that there is enough demand for the type of property you have bought.
Consider your costs
There are many costs involved with owning a property, from repairs and maintenance – to paying tax on your rental income. If you decide to rent your property furnished, which tends to be the most popular option, you may need to update and modernise this every few years to continue getting the maximum rental value that your home is worth. Decide if you would like to hire a lettings agency, who will be able to fully manage the property on your behalf. This is a great way to reduce the stress and time commitment involved, however you will have to pay a fee for their service.
Know your responsibilities and take out insurance.
Understand the legal side of being a landlord is essential to stay on the right side of the law, and ensure that tenants do not have ground to claim off you. We recommend taking out insurance, to protect you and your home. Make sure your property meets the required legal standards, and you do sufficient maintenance on the property to reduce the risk of injury occurring.