Posts with tag: first time landlord

On BBC Radio 4’s Money Box Live show, National Landlords Association (NLA) Chairman, Carolyn Uphill, says that first time aspiring landlords should not be discouraged by the negative press the buy-to-let market receives, and the potential financial difficulties.¹

Uphill was responding to a prospective landlord looking to break into the buy-to-let sector.

Become a Successful First Time Landlord

“First of all, it’s imperative that prospective landlords don’t underestimate what they’re getting into,” says Uphill. “At the end of the day, it’s a business and landlords should know what they need to do to make that business succeed.”

She continues: “Before starting out, I advise to research thoroughly, understand the market and what sort of tenant you’re aiming the business at, and finally, to make sure you seek out the best advice possible.

“I strongly advise joining a trade association like the NLA before investing a substantial amount of money. With the NLA’s new Effective Letting campaign you’ve got a better chance of getting it right first time.

“If you don’t want to manage your property, there are good agents out there, but you must make sure the agent is a member of a professional body like UKALA [UK Association of Letting Agents] before taking that route. However, it’s important to fully understand your legal obligations as you will still be responsible for certain things even if you use an agent, for example: making the home fit for habitation; ensuring that there are no category one hazards which can cause injury; that gas safety appliances are properly tested and in working order; that the property’s Energy Performance Certificate is up to date before you rent.”

She concludes: “Finally and most importantly, being a successful landlord requires effective communication, which in turn can help to reduce missed payments and voids that can have severe financial implications.

“With all tenancies, it’s important to establish a good, professional relationship from the start. It is also essential that you set out fair terms in your tenancy agreement and that both landlord and tenant understand their obligations throughout the tenancy. If you get this right, then the tenancy is likely to run smoothly.”1

More information can be found at www.landlords.org.uk.

¹ http://www.landlords.org.uk/news-campaigns/news/avoid-pitfalls-and-become-successful-first-time-landlord

Thousands of people in the UK are becoming first time landlords this year.

Emma Fildes, 34, is an estate agent for Fyre Mcdade. She lives in east London and has purchased a one-bedroom flat in Clerkenwell. Within two weeks of closing the deal, two students had moved in, paying £420 a week.

She says: “Having a buy-to-let property is something I’ve wanted to do for years but have always been a bit scared. I met a mortgage broker who went through the figures and he showed me it was absolutely feasible, so when this opportunity came up in Clerkenwell, I went for it.”

Fildes chose this particular location as property prices are set to boom there, an estimated 40% increase in the next five years, say Knight Frank. This is due to the Crossrail development.

By remortgaging her home, Fildes was able to produce a 20% deposit, and decided on a new build flat for letting out.

“In terms of finance, I worked on the basis of the worst-case scenario. When I realised I could cover my costs even if I got £30 less rent a week, which was far lower than expected, I felt it was too good an opportunity to miss.”

Thousands Become First Time Landlords

Rumeet and Richard Simmonds’ incentive to become buy-to-let landlords was the financial security it could provide for the future, particularly in retirement. “Working in finance, I felt investing in bricks and mortar was the best option,” says Rumeet.

The couple, who live in Kent, have bought a £385,000 two-bedroom flat in the Greenwich Square development. Rents in this area have risen by 11% this year, as a consequence of the new builds. The traditional family location has been attracting a younger market.

Rumeet explains: “We felt this development will have a strong sense of community, with a gym, swimming pool, medical centre and library. The other big selling points were the size of the apartments and the predicted rental returns.”¹

About 29,000 investors became buy-to-let landlords for the first time last year, says the Association of Residential Letting Agents (ARLA). This is a huge 80% ride from two years ago. It is believed that stagnant salaries, high living costs, and caution over other types of investment have drawn these landlords to the market. Buy-to-let offers low mortgage rates and high rents.

Choosing the right first investment property is key. Knowledge of the local market is vital for understanding who the tenants will be, and what property they’re looking for. If rental returns are your objective, then you may not receive long-term capital gains, or vice versa.

Emma comments: “I see a lot of people expecting amazing returns in London, but unless you’re brave and buy off-plan very early in the development, which overseas investors seem more willing to do than British buyers, you’re not going to get the 5% that was standard 12 months ago. You have to see it as a long-term investment.”1

Like Emma, buying a one-bedroom property can be the perfect investment. Initially, they are cheaper to buy, and are in demand from the young renting generation who cannot buy their own homes.

Director of Finders Keepers, a letting agency in Oxford, Frank Webster, agrees: “There is often a premium on the rent, too, as developers don’t build many one-bed flats or studios, and they often cost less than the lowest stamp duty threshold.

Family homes are also a great option, says Elliot Lester, sales manager at Aston Mead in Surrey and Berkshire.

“Don’t immediately just opt for what most investors choose; small flats close to good rail services for the city. There are many types of tenants and those that don’t need the railway will look in a much wider area.

“This is where landlords can see a good return on their investment. If you can afford to buy a small family house, you could see tenants staying much longer. That will reduce general wear and tear and save you paying fees for every new tenancy.”

A better net income can also be earned from freehold houses, as opposed to leasehold flats. Lester explains: “Many first-time landlords don’t take into account the cost of ownership, including service charges and maintenance fees, which can drain off four to six weeks’ rental income a year.”1

After taking the leap and becoming an investor, first-time landlords reap the rewards of a growing market.

¹ http://www.telegraph.co.uk/property/property-club/10405292/first-time-landlord.html