Tips for first time landlords & first time buyers of investment property

Investing in a buy to let property and becoming a landlord for the first time can be exciting and a great way to secure a better financial future. Many people invest in buy to let so that they can benefit from increased equity if the property rises in value as well as the rental income they can receive from renting their property out to tenants. However, there are a number of factors you should consider before becoming a landlord, such as which is the best mortgage lender to use, where should you buy a property and how much it will cost. The following information offers a guide for getting it right first time.

Rent rules
There are a couple of reasons why rent is so important to you as a landlord and buy to let investor. Firstly, consider rent as your revenue. This allows you to pay the costs you incur as a landlord, including your mortgage repayments, and grounds rent or service charges, insurance and maintenance costs. Whatever is left after your expenses, bills and taxes are paid is your profit.

Secondly, the amount of rent you can expect to receive from a property is the information your mortgage lender will be most interested in during your application process. Although there will be other factors they will assess, such as your own income, savings or credit history, a property with a strong rental potential is appealing to a bank or building society.

You should assess the risk associated with your property as though you were managing revenue in a business. For example, if a tenant moves out and there is a period in which the property is vacant, do you have enough reserve funds to cover the mortgage and expenses? Similarly, if a tenant becomes problematic or falls into financial difficulty, do you have provisions to allow for this and could you cover any legal costs if you had to? These are all questions you need to consider – ensuring you choose a property in an area where the rental market is stable is a good place to start.

Location, location, location

One of the best ways to ensure you have a guaranteed rental income for your buy to let property is to do thorough research into the area you want to buy. It’s sensible to choose an area where the rental market is strong, and there are a number of indicators you can look at that will help you choose somewhere safe and stable when it comes to rental potential. Schools, local amenities, transport links and low crime rates are all measurements you can use to spot an area where people want to live. It’s also a good idea to talk to local estate agents who can tell you more about the type of properties that are appealing to renters in a particular region.

DIY or managing agent?

How good are your DIY skills around a property? Could you fix a leaky tap, touch up the walls, patch up a roof or unblock a dodgy shower plug? If the answer’s yes, a self-managed rental property could be for you. If you’re not so handy around the house however, there are many reputable managing agents that can help you with the managing of a property. They’ll handle everything from tenant complaints about heating to chasing rent if a payment is missed.

Know the law
As a landlord, you are required to adhere to the rules and legislation associated with renting a property out to other people. These range from regular gas inspections to particular eligibility checks on the tenants you are allowing to live in the property. One of the most recent requirements to come into effect is the registering of a tenant’s deposit money with an approved Tenancy Deposit Scheme. Failure to do so can result in a fine and disputes over what the tenant has to pay for if your property or furnishings are damaged. We recommend you review all of your rights and responsibilities when it comes to private renting by carrying out your own research.

Selecting the best mortgage

Buying a property as a buy to let investment is often a long-term strategy for building your personal investment portfolio. For this reason, it’s important to consider not only the best mortgage deals at the time you buy but also how those might change in the future. For example, as it’s your first time you might not be fully aware of all the costs involved in being a landlord, so a lower mortgage interest rate for a shorter fixed period might be more suitable.

Once you are more experienced and understand all the implications and responsibilities of being a landlord, you might wish to ‘lock in’ a rate for a longer term. Whatever your personal circumstances or reasons for becoming a landlord for the first time, it’s wise to speak to a reputable and qualified mortgage advisor who will understand your personal motivations for investing in buy to let. At Private Wealth Mortgages we make a promise to get to know our clients, their financial circumstances and their own individual aspirations for the future. This helps us to piece together a longer-term mortgage strategy and present you with the most suitable mortgage products available.

To find out more about the services we offer, click here. To talk to one of our experienced and qualified mortgage advisors call us on 01403 270006 today and one of the team will be happy to help.


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Private Wealth Mortgages Ltd is authorised and regulated by the Financial Conduct Authority. FCA Number: 445980

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