With the number of first-time buyers falling to yet another low thanks to stringent mortgage lending restrictions, there’s never been a better time to be a landlord.
In some cities, letting agents have reported scenarios of up to seven people bidding to rent the same property. And we do mean ‘bidding’ with some landlords choosing tenants via a process of sealed envelopes.
So you can see why buy-to-let would be such a tempting prospect right now – at least for those with large deposits and plenty of equity.
But before you jump in and secure that extra property, it’s not a given that you’ll attract the tenants you want. In fact, there’s one or two pointers you should bear in mind prior to purchasing that property:
Location. It may be a bargain but is it the type of area tenants would want to live in? For instance if there are not many amenities around and its twenty miles into the centre of town, maybe it’s not such a great option after all.
Assumptions. Just because there are two universities nearby with a total of 10,000 students, don’t assume that every one of them will want to move into your property. For a start, the competition from other landlords will be HUGE.
Letting agents. Hire one. They know the score and already have a list of prospective tenants on their books. They’ll charge a fee – of up to 14 per cent but at least you can hand over all the work and worry to them.
Long-term. You’ll probably want to sell your property at some stage to go and live in the Maldives or somewhere similar (well, we can all dream). But seriously, try and forecast. Find out if there’s any regeneration planned for the area you intend to buy in. Has it gone downhill over the past ten years? If so, there’s a good chance it’ll get worse.
Indifference. Don’t believe that once you’ve found your tenant it’s a case of just sitting back and waiting for the money to come flooding in. Lots could happen between them signing the lease and moving out. For instance, if you hadn’t done your research property imagine your surprise when you discover the Home Office is planning a prison in the adjoining field. Or maybe your perfect tenant has been offered a job abroad that he just can’t turn down? Always, always keep on your toes because there’s at least one certainty in this business – things change!
