With mortgages continuing to be out of reach for many first time buyers, and the UK rental market continuing to grow, there’s never been a better time to become a landlord.
Below we share with you some of the key things you need to consider before creating your own property empire.
Location, location, location
As Kirsty and Phil have been telling us for several years, buying a property is all about the location, and this is perhaps even more important for buy-to-let properties.
Not only do you need to make sure the property is in a desirable area but you also need to think about transport links, schools and outside space. Renters can be very choosey and ensuring you pick the right house will ensure the amount of time that the property is empty is kept to a minimum.
Another key point to consider is the clientele of the area. If you’re in the heart of a student area, rental income is likely to be lower. There’s nothing wrong with that, just don’t go out and buy a penthouse and kit it out with high end furniture!
Keep it legal
When renting property in the UK it is important that you meet certain safety standards.
The two main requirements are that the property and your tenants have a gas safety certificate that’s updated annually, and an Energy Performance Certificate.
There are also rules and regulations associated with treating damp, maintenance, fire safety and much more. If you’re renting your property through an agency they will be able to help you with this, if not it may be worth while consulting a solicitor.
Picking your tenant
Getting good tenants into your property can sometimes be the hardest part of the whole process.
You need to ensure that they are trustworthy and will look after your property, pay rent on time and keep up any maintenance such as garden work and general cleaning.
Unfortunately there’s no tried and tested method for picking your tenants. Sometimes you don’t have the luxury of picking a tenant, you just need someone who will pay the bills!
But if you can, you should always ask for references from current employers and previous landlords. If tenants are unwilling to give these details it could be better to avoid them.
Plan for the worst
Not to put a dampener on things, but you should always plan for the worst when it comes to renting property. Never rely on the income and always keep some funds for repairs, maintenance and any times when the property is empty.
Although being a landlord can be a tiring process the rewards can be huge. As long as you get good tenants you could have a nice income stream for years to come, and once your mortgage is paid off you have a free house!
This guest post was written on behalf of Ashley Park Debt Solutions who specializes in consolidation loans, IVAs, debt management plans and other financial solutions.
Editor’s note: I have been a landlady in a student town for five years, and a way I have found to increase my rental income was to rent each room separately. I also include all bills and pay them myself, so the tenants know exactly how much they can budget for housing costs. All the furniture was bought second hand or from cheap stores, and the small surplus each month is kept to cover the bills should a room stay empty. Having a contract for each room, the chances they will all be empty at the same time is lower. And the tenants screen potential new roommates before I make a final decision, to ensure they get along.
Do you own rental property? What is your experience?
My Financial Independence Journey says
I used to live in a college town. Renting out apartments by the room was in vogue there. So was bundling all the utilities into the single bill. I think that this a pretty good idea if you’re renting to students. Keep it simple for people who are too busy drinking and partying to pay attention to the bills.
But personally I hated it. Since I wasn’t a student, I had to wade through tons of rooms for rent in order to find an actual apartment.
Pauline P says
the website I use to advertise the rooms allows to say it is a flatshare and not a whole unit so you can search for either this or that. I have young professionals too who appreciate the all inclusive rent, when I was renting and had to fight over splitting the bills and getting each tenant to pay his share it was a real headache.
Edward Antrobus says
Speaking as a tennant, I would say that if you treat your tennants and potential tennants like criminals and trash, that’s what you are going to end up with. But if you treat them with respect, show them a nice place at a fair price, then you are going to attract quality people like myself who will treat the place like it was their own.
Mrs. Pop @ Planting Our Pennies says
Completely agree with Edward, but from a landlord’s perspective. We treat renters with respect, and they get a great place for the money. In exchange, they are great to the property, and we’ve never had a problem with tenants abusing the place.
Pauline P says
that is really important. my tenants are so good at the moment I never want them to go! and am not raising rents this year to say thanks for keeping the place in good shape.
Pauline P says
great point. I have had both kinds of landlord and tried to exit asap when they wouldn’t be helpful and do their landlord duty.
As a tenant, I totally agree. I’ve turned down a couple of places in the past because the potential landlord treated me like trash. Which I’m not. Never missed a rent payment in my life. I’ve rented from people who are on top of their game and treat me like they actually want me in the place.
Those are super great tips about the student rentals, by the way, editor. 🙂
Pauline P says
haha thank you! If you give peanuts, you get monkeys… but some landlords for whatever reason keep doing it and then wonder why people trash their place.
The Norwegian Girl says
One day I really want to invest in real estate, as it`s one of the most profitable investments here in Norway, so I found this article very interesting! And being a renter, I`ve come across very different types of landlords, everything from mild psykopats to the superkind landlords we have today. And well, having such a nice landlord makes all the difference! I`m hoping to stay here until we buy an apartment.
Pauline P says
That is my take trying to make my tenants happy so they stay longer and keep the place well. With a bad landlord you only want to get out asap.
Interesting and very clear thoughts. Thanks for this. Looking forward to similar advice.
KK @ Student Debt Survivor says
We’re hoping to buy a rental in the next year or so. Finding the right tenants is something we’re really serious about (and plan to be careful about). We also plan to “plan for the worst”, just in case the renters lose their jobs etc. In this economy you never know what’s going to happen, so we wouldn’t buy something unless we were sure we could cover the mortgage ourselves.
Pauline P says
on my last property I had tenant’s insurance, that was expensive but covered the rent when the tenant couldn’t pay.
As a former estate agent Pauline, I have to agree that location is everything – be it for rental or purchase. I will also agree that a ‘per room’ rental arrangement – particularly for students (who have too much cash anyway 🙂 is the way to go.
I often think however, that private landlords are way too selective when it comes to tenants…no benefits, no pets, no smoking…no breathing. It got quite ridiculous at times. Landlords often seemed to forget that tenants were paying handsomely for the right to rent a property…and at times seemed to lose sight of reason.
One point I would urge any prospective landlord to consider is this…if a tenant is willing to pay £600 a month and you’re asking £700 a month…TAKE IT the number of times landlords turned down reasonable sums and then had vacant properties on their hands for months (which cost then far in excess of the rent deficit) was mind boggling.
Hope you’ve figured out what to do with that undersized mattress 🙂
Pauline P says
just christened the undersized mattress last night! it is beautifully comfortable which makes up for its size :).
I am a picky landlady, mostly with DSS, I have had pets and smokers, but always make sure the others are ok with the pet or smoke before taking the tenant in. Sure better 600 pounds now than 700 in six months, but having someone bad could cost me the other tenants so I’d rather wait a bit more if the decision is not just about price. So far after 5 years I have only had an empty week in one room so I imagine my price and value are good.