Buy to let properties became a popular choice of investment in the property boom. Large rises in the value of property meant that ordinary working folk found that they had a large amount of residual value (equity) in their homes. House owners all over the country rushed to remortgage their homes and invest in a second property citing property investment as a better alternative than investing in conventional savings accounts or pensions.

As a means of building up an asset base and a steady income over the long run, buy to let has traditionally served as a reliable investment choice.    

As the market rises from the recession, there remains a steady core of established landlords with successful buy to let businesses. With many aspiring first time ­buyers unable to get on the housing ladder, demand for rental properties is high.

So would-be landlords with plenty of capital, have the chance to snap up a buy to let bargain.
There are inherent risks in buy to let. Potential landlords need to understand the risks of buy to let:

Be prepared for interest rates rise?  Will the rental income from the Property cover the mortgage payments?

Remember that Buy to let ties up capital.  You cannot readily access the money invested in it. This could be a problem in a falling market where the value of the property is reduced and it may be difficult to sell at a profit. You may need to own the property for a longer term than may have been initially anticipated whilst you wait for the market to rise again. 

Make sure that you get the correct mortgage: you will need to get a buy to let mortgage.

Factor in the periods of time the property is not let – will there be enough money to cover the mortgage and other costs during these periods when there is no income coming from the buy to let property?  

Allow for the fact that the tenant may be late paying the rent or may not pay it at all.  Evicting a tenant may incur legal costs. Consider purchasing rent guarantee insurance when purchasing a buy to let property.

Factor in the fact that Buildings Insurance will generally be more expensive as you will need to have Landlords Buildings Insurance for your buy to let property.

Be aware that tenants generally do not look after a property as well as you would. It is not uncommon for the buy to let property to require cleaning, redecorating and even repairing at the end of a tenancy.

Make sure that you have an ‘emergency fund’ to pay for unexpected large repairs such as the replacement of a boiler in your buy to let property.

It is likely that your lender will require all tenancies to be under an assured shorthold tenancy. You will need to get professional legal advice about your buy to let property.

Engage a letting agent to manage the property.  Most managing agents charge a fee of around 15% of the rental. Managing agents will be able ensure compliance with the statutory regulations (such as the housing act, tenancy deposit scheme, Houses of Multiple Occupation registration), they will handle the hassle of awkward tenants, the advertising of the property and getting new tenants. They will generally handle all the paperwork and many will provide the tenancy agreements for your buy to let property.

Tax considerations. Be sure to inform the Inland Revenue of the income from Buy to let. Owning a second property may also mean a liability to Capital Gains Tax when you come to sell. It is important to minimise this by consulting an accountant.

Each tenant will need to be provided with an Energy Performance Certificate at the beginning of their tenancy.

Research the neighbourhood in which you are buying the buy to let property. A cottage in an isolated hamlet will not be nearly so rentable as a house in a university town with a steady flow of students looking for houses to rent or a bustling town with a major industry with a steady supply of employed factory workers. Check that the neighbourhood is an area where people want to live.

Have a definite idea of who you are going to rent to, before buying the buy to let property. A flat on the tenth floor of a tower block would not appeal to a family with young children – though a three bedroomed property in the catchment area of a good school would. 

When renting to students, the house will need to be easy to clean but not luxurious – you will also need to factor in damage. Also, if students are your target market - do not buy a property in a quiet residential area especially one with a high proportion of retired residents.

A professional couple would be looking for the more modern look – laminate floors, a higher standard of furnishing and modern kitchen. A family will want a ‘blank canvas’ for them to put their own stamp on the property.

It is also important to note that most lenders will not allow the property to be let to tenants who are unemployed and are in receipt of benefits.

Don’t be too ambitious and buy too many buy to let properties at once. As mentioned above, buy to let properties do require a certain amount of management. Good management of buy to let property is best learnt over a period of time. Build your portfolio at a steady pace.

At iconvey, we are specialists in conveyancing and Property Law with  many years of experience and expertise in buy to let properties. Iconvey  will guide you through every step of the way;  working closely with you, our  dedicated teams of three, our experienced and knowledgeable conveyancers are always at hand keeping you informed every step of the way. We ensure that you are always aware of the costs at the outset with a transparent fee structure and no hidden fees.

You can obtain an instant quote for your conveyancing from this website, (just click here).  Our quotes are guaranteed, fully transparent and include no hidden extras for a normal conveyancing transaction.  Alternatively, simply call us on 0844 225 2061for more information or to discuss your particular needs.