Buy-to-Let

Top tips

  1. Choose the right property.  Ensure the location attracts a steady flow of tenants.
  2. Get the right financing.  Speak to lenders to establish how much you can borrow.
  3. Take a long-term view.  Always treat entry into this market as a medium to long-term investment.
  4. Consider the hidden costs.  Ensure the rent covers not only the mortgage but the ‘hidden costs’ of    maintenance and insurance as well.
  5. Think about a contingency fund.  Ensure you have the equivalent of three months rental income put aside to   cover mortgage payments during void periods between tenants.
  6. Choose a letting agent.  For a fee of around 15% of the gross rental income, a letting agent will take care of   tasks such as finding tenants, getting the necessary references and collecting rent.
  7. Put the right tenancy agreement in place.  Always have a tenancy agreement in place before a tenant    occupies your property.
  8. Ensure you have the right insurance.  As the owner, you are responsible for insuring the structure of your    property, which will include any permanent fixtures and fittings.
  9. Comply with fire regulations.  Local authorities require you to comply with fire regulations.  This could mean   putting in fire doors and smoke detectors.  Ring your local authority for advice and a fact sheet.
  10. Sort out your tax position.  Rental income is taxable but the mortgage repayments are tax-deductible.  Any   profit you make when you sell the property will be liable to capital gains tax charged at the highest rate of   income tax.
  11. Before tenants move in, produce a detailed inventory.  Include all the contents in a furnished property to    safeguard against any missing or damaged items.
  12. Always get a deposit.  This will protect you against any damage caused by the tenants or default on the rental payments.

Article taken from 'What Mortgage' magazine