The UK’s property market has strengthened in the past 12 months, and with the Bank of England hinting that interest rates will remain low for the foreseeable future, there is every chance that more people will be applying for mortgages.
We’ve noticed an upturn in the number of would-be landlords looking for buy-to-let home loans in the last year and fully expect this trend to gather pace. Following years of misery during the financial crisis, property is now an attractive investment once again.
Although returns can be attractive, being a landlord is not as easy as it might seem, and it requires somebody with a sharp mind and a proactive attitude to make serious money from property rentals.
Here are five tips to maximise your ROI.
1. Minimise ‘empty days’
According to Leeds Empties, which is run by Social Business Brokers, the average empty property will cost the owner around £650 a month, the equivalent of £7,800 a year. These costs can be broken down into buy-to-let mortgage payments, insurance, repairs, utilities (mainly standing charges) and council tax. This doesn’t even take lost rent payments into account.This is a particularly big concern for landlords who have a number of student properties in their portfolio.
Empty homes can also attract vandals and thieves, so you need to plan carefully to ensure your property is being lived in all year round.
2. Understand the ‘going rate’
You can lose out on a serious amount of money unless you stay abreast of latest peaks and troughs in rents in different areas. If you are charging £650 a month in rent for an apartment in a prime location, yet similar properties in the same street are going for £850 a month, you are obviously missing a trick.
3. Assess the level of demand
A new report published by the Intermediary Mortgage Lenders Association indicated that over half of UK homes will be rented by 2032, as housing shortages and rising prices have made it harder for first-time buyers to get a foot on the ladder.
Clearly, this situation will work in favour of landlords who had the foresight to buy homes in desirable locations. Your returns can be improved by investing in up-and-coming areas, as house values can rise suddenly. Do your homework and identify towns and cities that are on the brink of a boom period.
4. Sort out a long-term maintenance deal
We’ve all played Monopoly, right? It’s all fun and games when you have a hotel on Mayfair and Park Lane, but the smile is soon wiped off your face when you pick up that Community Chest card that instructs you to make repairs to all of your properties.
Building maintenance can be a huge financial burden, so it might be best to strike up a long-term relationship with a property management specialist. They can remove the stress of dealing with various tradespeople, helping to minimise costs if you negotiate a favourable fixed deal.
5. Choose tenants wisely
This ties together a number of the previous points, but it cannot be stressed enough that bad tenants can be a nightmare. Cashflow is a big issue for landlords, especially those that are just starting out in the industry, and the last thing you need is a tenant who is constantly making late rent payments.
As well as conducting a credit check, you should also seek references from previous landlords to ensure your new tenants are not going to cause problems.
About the author
|Tom Wills writes for City Home – a Leeds-based company that manages a range of properties across the city. Tom moved to Leeds to further his studies, and upon graduation he couldn’t bear to leave the city he’d come to know and love. He developed a passion for estate agency while searching for his first professional home, and his career grew from there. Using his expertise to find his clients their perfect house, Tom could not imagine working in a more rewarding industry.Tom can be contacted on firstname.lastname@example.org|