The first warning comes as statistics reveal that the number of repossessions of buy-to-let properties is on the increase; they have been rising annually since 2009 and rocketed again by 7% last year to 33,000, according to the Council of Mortgage Lenders.
Void periods and rent arrears are the main reasons for a landlord losing a property which is why one property investment firm says it is imperative that landlords build-up a fund to help pay for unforeseen circumstances and avoid falling into financial problems.
How to avoid losing your buy-to-let property
This single step, says Peter Armistead of Armistead Property, will help prevent losing their property.
He said: “It's important that landlords set aside 30-35% of their gross annual rental income to cover maintenance, void periods, rent arrears and repairs. The money also pays for refurbishment and replacing furnishings.”
He added that the money will also pay for gas safety certificates, as well as letting agents' fees and that a property will need to be redecorated every few years and funds should also be set aside for replacing boilers and doors.
On top of this, radiators, external doors, driveways and guttering will need to be replaced over a longer period and, depending on the age of the property, the roof may well need replacing also.
All of these are unexpected costs and landlords should have a contingency fund to help pay for them.
A contingency fund is vital for landlords
Mr Armistead added: “Over the long term, having a buy-to-let property is very profitable but landlords will need to invest wisely and it’s like running a business which means having a business plan and funding to pay for all of the costs they may encounter in the life of their investment.”
In the second warning, from AA Home Membership, the level of commitment needed from landlords is generally more than many had expected.
They have carried out research which reveals that in the past year around 20% of landlords had returned home from holiday early to help a tenant repair or fix a problem.
In addition, 18% of landlords said they had had to take time off work while another 16% have left a wedding or other special event to resolve issues.
Only 30% said they had not been inconvenienced by their tenants.
Helen Brooker, the AA's head of membership, said: “Landlords are ‘on-call’ 24 hours a day and they often get a bad repetition for not helping tenants when they are needed but from our research that's often not the case.”
