Becoming a Landlord

Becoming a Landlord with Jordans

You may be considering letting for a number of reasons. Perhaps you will be working overseas for a number of years and want to retain a stake in the domestic UK housing market. Perhaps you have recently inherited a property or you may be one of a growing group of people who view property as a key element of their investment portfolio.

Whatever the reason for letting, the private rental sector has never been more attractive. Recent legislative changes have removed many of the uncertainties associated with letting, so that you should always be able to regain possession of your property. There are precedents and grounds in law which mean that the Courts must award possession to a Landlord.

Financial returns from letting have significantly improved due to the return to real growth in property prices, the availability of ‘buy to let’ mortgage schemes, and the ability to offset many costs associated with letting against rental income for tax purposes. Letting can provide both Income and Capital Growth.

Strong economic growth, an increasingly mobile professional workforce and corporate relocations combine to ensure a strong demand for rental property in this geographic region, thus ensuring that you have minimal periods when your property remains unlet.

Contact Jordans today for a Landlords Guide.

Buy-to-let mortgages offer home owners the opportunity to purchase additional properties which they can use to rent out to Tenants. This additional investment can be used as an extra income or as a future asset. So is buy-to-let right for you? Take a look at this brief guide and find out how you can get the best return on your buy-to-let investment.

Why buy to let

Over time, property is a sound bet for a good return on investment. The home you purchased ten years ago is likely to have doubled in value today.

Investing in property therefore, can be a worthwhile investment, and if you rent out the property you will be able to keep up the repayments on your additional mortgage.

With more people renting rather than buying you should not have much trouble finding Tenants, but it is worth checking beforehand that you are not purchasing a property in an area that already has more supply than demand.

It is also easier now to evict troublesome Tenants. The Housing Act 1988 has given Landlords more power to evict repeat offenders.

Investment and Income

Essentially, purchasing an additional property is an investment, which means you must decide whether you want to help that investment to grow or use it as additional income. If growth is your primary goal then city centre locations can offer high levels of return. However, as the majority of rental properties are concentrated in city centres, competition for Tenants is usually higher.

If you are looking to use your rental property as a vehicle for additional income, then consider suburban areas where properties will generally be cheaper and the rent lower, so relative returns are likely to be greater over the long term.

The Association of Residential Letting Agents (ARLA) estimate that, as a Landlord, you should be able to claim gross rent equivalent to between 130% and 150% of the property's mortgage repayments (interest only).

Letting Agents

Letting agents normally charge around 10%-15% of the agreed rent, but this can vary subject to the work you ask them to do for you. It is advisable to budget for this when you make your initial purchase and set your rental figure.

You should find a letting agent who is a member of the NAEA or ARLA which means that they must join a bonding scheme which will protect not only your rent but also your Tenants' deposits, should the agent go bust or misappropriate these funds.

Your responsibilities

As a new Landlord your daily responsibilities will largely depend on the level of responsibility and work you agree with the letting agents. However,  as the owner, you will be responsible for the property’s upkeep, as well as building and contents insurance.

You must also make sure that any gas or electrical equipment passes safety checks and complies with relevant regulations. Remember too, that maintenance costs, such as cleaning, gardening and your agents fees can be offset against tax.

Whilst there is no doubt that buying a property to let can be a worthwhile investment option, it is important to remember that buy-to-let also has an element of risk.

You need to make sure that you keep up the mortgage payments on the property. The rentals market may be buoyant, but you must still consider the possibility that at times you may have no Tenants, but you will still need to pay your mortgage.

You also need to consider the condition of your property. It may well be cheap to buy a place in a run-down area that needs renovation, but it could be expensive to refurbish. When you look to sell the property in the future, you may not get the return on investment you expected. Jordans Landlord Clients receive a discount from the Jordans sales team should they decide to sell an investment property.

As with most investments, it is prudent to look long-term to get the most out of a buy-to-let property.