Purchasing your first buy-to-let property marks the beginning of your journey into property investment. For first timers, it can be a very daunting prospect to market and rent out a home. Follow our guide and take your first steps into this challenging yet lucrative investment niche.
Update Your Mortgage Lender
Before you can rent out a property you must inform your mortgage company. Some mortgage companies will not allow you to let out a property at all, while others will ask you to change to a new mortgage deal that allows letting. If you are lucky, you just need your mortgage provider to grant you with “consent to let”. But your mortgage provider may charge a fee, or adjust the interest payments, to achieve this.
Set Your Rental Periods
If your property can be rented to corporate clients, you should set up agreements for a minimum of two to three years, with a fair cancellation policy. For residential lettings, shorter term lettings are expected, but always try to tie tenants into a 12 month contract. Think about setting a competitive price to avoid long periods with an empty property.
Understand Your Tax Responsibilities
You must inform HM Revenue and Customs if you rent out your property, and you will need to complete an annual self-assessment tax return. You also need to ensure that you pay any capital gains tax due on the property when you sell, so consider this when determining the viability of an investment. Hiring an accountant to talk you through your options is always a good idea.
Improvements and Maintenance
With the exception of new builds, most properties require some work before they are ready to be let. Make sure all rooms are well decorated, with clean carpets, well-kept kitchen and bathroom units and functioning heating and hot water. Tenants also expect telephone lines with broadband capabilities, so ensure this is set up, too.
You will need to hold certificates to show that the property has passed safety tests for its electrics and heating, so organise Portable Appliance Tests, an Electrical Installation Condition Report, and a Gas Safety test.
You must have insurance in place, both to protect against damage to the property and also damage to fixtures and fittings. If you are providing a furnished property, you’ll need cover for the furniture. In addition, you should take out specialist landlord insurance.
Hygiene and Cleanliness
Before letting a property you should ensure that it is spotlessly clean. Your property should look like a show home to any would-be tenants, so hire professional cleaners before your first tenants arrive. You can ask your tenants to professionally clean the property when they move out to save having to do this yourself – be sure to include this condition as part of the contract.
Have an independent inventory carried out, which the new tenant must sign and agree. Anything missing can then be deducted from the tenant’s deposit when they leave.
Be Flexible and Responsive
The lettings industry can be very dynamic, so stay organised and be ready to act quickly. Keep all your paper work in order to avoid delays.
Client Money Protection Scheme
Last but not least, choose a Client Money Protection Scheme agency to work with. The main agencies for property investors are the Association of Residential Letting Agents (ARLA), the UK Association of Letting Agents (UKALA) and the National Approved Letting Scheme (NALS) – they all provide client money protection.
Follow these steps and you should have a stress-free time letting out your property! However, if you need any further advice regarding property investment opportunities, Surrenden Invest’s London-based consultants are just a phone call away. Keep an eye on our latest news section, too, for timely insights and analysis into the current state of the property market.