Letting a Property Frequently Asked Questions

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Frequently Asked Questions from Buy to Let Landlords
Below are the top questions we've been asked about letting a home - so we thought it would be helpful to publish them! Don't forget you can email us on enquiries@designsonproperty.co.uk or call us on 0845 838 1763 if you need support during your property letting or rental period.

I am new to Buy to Let investment what do I need to know?
Lots! We suggest you read our lettings eBook, but briefly you need to understand the area you are buying into, from a property cost/tenant rental income potential; make sure you seek financial and tax advice before you buy;  understand the legals of BTL and check that BTL investment will deliver against your investment objectives.

Need to find out more? Try our Letting a Home store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as off a property valuation!

What level below market value (BMV) should I buy a property for?
Most property investors are looking to buy at around 20% plus below the actual market value (not the advertised price). However it depends on the property, it's potential and how long you are going to hold on to it for. In 2009 to protect against negative equity you probably need a 15-20% discount. 

Need to find out more? Try our Letting a Home store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as off a property valuation!

How do I find a Buy to Let that is profitable?
This takes time and you'll need to wade through over 100 potential properties PER MONTH to find one that stacks up in the 2009 market. The basic rule of thumb is the more rooms you let out, or the shorter period of time you rent the property for, the more money you take. To achieve this you need to do your research, find local lettings agents that specialise in lettings and know their local area well. You need to make sure that the property stays rentable for the length of your investment and gains capital growth. 

Need to find out more? Try our Letting a Home store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as off independent buy to let consultancy services!

How much will it cost to purchase a Buy to Let?
The costs depend on the price of the property. Typically under £175,000 it'll cost around 1-2% of the property's value, over £175,001 around 2-3%; over £250,000 around 8% and over £500,000 approximately 8-10%. This doesn't include running costs/one off refurbishment costs.

Need to find out more? Try our Letting a Home store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as off property valuation services!

What do I need to think about if I rent out my own home?
Be careful who you rent to! Make sure you speak to a legal lettings specialist, a good lettings only agent and check with the Inland Revenue what tax you are likely to incur. You need to make sure that you speak to a property tax specialist or buy to let tax specialist and advise your mortgage/insurance company. You will need specialist insurance to cover tenants living in your home and it's advisable to take out insurance to protect you from damage/non payment by the tenant(s).

Need to find out more? Try our Letting a Home store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as off letting agent fees!

What are the main Buy to Let running costs?
You need to consider costs including your mortgage, buildings, contents and tenant insurance; any letting agent fees or self management costs such as tenant referencing, credit checks and tenancy agreements;
tenancy deposit protection; inventory; maintenance costs. Depending on how you let the property and whether you include all bills, you'll need to budget for voids, utility and council tax fees.

Need to find out more? Try our Letting a Home store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as off Energy Performance Certificates!

How long will it take to make a profit on a Buy to Let?
Most property investors expect to hold onto their buy to let investment for at least 10 years, but currently investment experts are suggesting holding for 15+ years. You can secure some buy to let deals that give
positive cashflow from day one of ownership, but these are typically specialist Homes in Multiple Occupation and require specialist knowledge/help and support.

Need to find out more? Try our Letting a Home store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as off buy to let consultancy services!

What insurance do I need for Buy to Let?
Legally you must have buildings insurance, but it is advisable to have contents insurance which covers items you own in the property. It is also advisable to take out specialist tenant insurance that covers you
if the tenant(s) damages your home, either maliciously or accidentally and if they default on the rent which can incur thousands of pounds in costs and take up to six months to evict them and gain repossession of
your property.

Need to find out more? Try our Letting a Home store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as off buildings, contents or tenant protection insurance!

What insurance protects me from tenant problems?
you need to look for specialist insurance that covers malicious as well as accidental damage by tenants and covers loss of rent/legal costs of evicting a tenant that can't/won't pay their rent. This type of insurance
can also include covering you as the landlord for a tax inspection and sometimes covers the cost of a letting agent (if bought through them) of dealing with the insurance claim for you. Tenant protection insurance costs are from from £99 for annual cover. 

Need to find out more? Try our Letting a Home store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as off buildings, contents or tenant protection insurance!

How do I choose a good letting agent to manage my properties?
Make sure that you choose a NALS agent or at least one that is registered with ARLA. Look carefully at their costs. A good agent will give you one sheet of paper which lays out clearly all the costs you would incur.
A bad agent typically hides these costs in 20+ pages of terms and conditions! Ideally you should pay a one off fee and a monthly management fee. These fees should cover the majority of costs. But beware, some agents charge these costs then everything they do such as the inventory, tenancy agreement etc are also charged for. Ask too what happens with tenant queries, are these just passed to you or does the agent deal with them and if so at what cost?

Need to find out more? Try our Letting a Home store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as off letting agent fees!

What returns can you get from Buy to Let?
These vary dramatically depending on when you bought the property and the type of rent. Typically over a 10+ year period, capital growth should average out at 5% per year and rental income yields from 4-12% depending on the type of tenancy.

Need to find out more? Try our Letting a Home store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as off independent buy to let analysis services!

Do I need an Energy Performance Certificate?
If you want to market your buy to let via an agent or an advert then yes it is a legal requirement to have an Energy Performance Certificate (EPC) to be available for the tenant to view. They cost from £50 to over £100 depending on the size of your property.

Need to find out more? Try our Letting a Home store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as off Energy Performance Certificates!

Can I avoid the Tenancy Deposit Scheme?
Why would you? You can get them for free via the DPS service and they are great selling point to tenants. Don't try to avoid joining a scheme - it's a false economy!

Need to find out more? Try our Letting a Home store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as off landlord association fees!

Where can I find a good letting or tenancy agreement?
Your letting agent should be able to provide one within their fees or you can buy tenant agreements on-line or via a lettings specialist legal company.

Need to find out more? Try our Letting a Home store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as off tenancy agreement fees!

Are there any agents that can manage my portfolio of properties across the UK?
There are three types of companies that will do this for you. Firstly large letting agent organisations such as Belvoir can do this, giving you one point of contact. Secondly there are 'internet based' companies that handle all of your property management using local letting agents to find tenants for you. Finally there are large organisations that manage thousands of properties across the UK for property organisations with thousands of properties to rent.

Need to find out more? Try our Letting a Home store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as off letting agent fees!

What's the pros/cons of self managing buy to let properties?
The upside to self managing properties and tenants are mostly control and direct contact with tenants which can avoid 'chinese whispers' depending on how good (or bad!) a letting agent is at dealing with tenant queries. Many self manage to save costs but these are often not as high as landlords think. The downsides are that you are the emergency contact for the tenant, so day/night they will contact you, even on your holidays! You also need to be fully up to speed with letting a property legally from tenancy deposits; gas, electric and fire issues; eviction rules and regulations and local licencing laws, if applicable. If you are going to self manage, then it is essential to be part of a landlord organisation such as NLA or RLA, or accredited by your local authority.

Need to find out more? Try our Letting a Home store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as off tenant agreements!

Are there any good tenant referencing tools I can use?
There are, but they are only as good as the data they search, so don't rely on them 100%. You need to find a tenant referencing tool that will check for CCJ's, defaults on other payments as well as gain good references and take a view on the person's personality. Don't forget you can check the tenant out, but if they invite lots of no good friends around, it's only your tenancy agreement that can protect you! Visit our tenant referencing services.

Need to find out more? Try our Letting a Home store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as off tenant referencing services!
 
Do I need to pay for an inventory or can I do it myself?
With the tenancy deposit protection scheme in place it's advisable to have an inventory done by a third party as if there is a dispute, the Tenancy Deposit Protection Scheme company or a judge is likely to look more favourably on an independent inventory. If you do carry one out yourself make sure there are lots of photographs and even a video recording in case of a dispute. Inventories however don't cost that much versus the time they take, so doing it yourself (unless you really enjoy it) can be a false economy.

Need to find out more? Try our Letting a Home store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as off inventory fees!

How do I evict a tenant?
Carefully! The eviction procedure should be laid out in your tenancy agreement and you will have to go to court with a Section 21 Notice to gain agreement to enter the property and change the locks. If you try to evict the tenant by force, even though it's your property, you can be prosecuted.

Need to find out more? Try our Letting a Home store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as off landlord eviction services!

What Property Tax will I have to pay?
Property tax for buy to let investors is tyipcally paid on any profit from rental income and capital growth, if the property was never lived in by the landlord. Property Tax is incredibly complicated and you should seek specialist advice. Although this can cost around £200 per hour, it can save you literally thousands of pounds. Part of the property tax you owe will depend on the original intention you had when you bought the home, so make sure you visit a property tax expert BEFORE you buy an investment property.

Need to find out more? Try our Letting a Home store or join as a member of Designs on Property and receive support throughout your property project including all our factsheets and ebooks for free. We will even save you £££s money when booking services such as off property tax services!
  

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