Online House Hunter: Buying to let
RENTING has never been very ‘English’. While European countries treat it as a permanent solution to housing, in this country it’s usually seen as a short-term fix before going on to buy property.
The English Housing Survey shows that the private rented sector accounts for just over 15 per cent of housing in England. In some parts of London and the south-east the buy-to-let market is once again strong although in other parts of the UK buyers still need to proceed with caution.
The Association for Residential Lettings Agency’s operations manager Ian Potter commented: “Buy-to-let properties can prove to be a sensible, long-term investment, but consumers must do their research first in order to achieve success. Becoming a buy-to-let landlord is a decision which must not be taken lightly. Landlords must be aware of the legal responsibilities to their tenants and ensure that they use an ARLA Licensed agent so that their money is protected.”
It’s generally a buyer’s market at the moment and for those tempted to consider buying-to-let the ARLA has some advice:
* Research the local market – this is essential to ensure that you invest your money wisely to increase the likelihood of you receiving that monthly return. Buy-to-let is a solid long-term investment that supports the entire property market, not a quick money-making scheme. The rental market does suffer ups and downs, and behaves very differently from region to region, so it’s critical that you select the right property in an area you have researched in detail. A local, regulated ARLA letting agent will be able to help you get the information you need.
* Make sure you have the right mortgage and the right finance in place – as you’ll need a specialist buy-to-let mortgage. Lending grew by around 7% in the buy-to-let sector during 2010, underlining the continued strength of the market, so look around to get the best deal. ARLA agents can advise on the most competitive buy-to-let mortgages in the market or you can visit www.arlamortgages.co.uk.
* Prepare your documentation – carry out full credit checks on all prospective tenants to assess the risks in accepting the tenancy. You should also check the current and previous employment status of the individual(s), as well as their renting history and any references provided. In addition, your property must have buildings and contents insurance suitable for letting your property, and also consider insuring against the tenant defaulting. Recent ARLA statistics show that 40% of ARLA members reported an increase in tenants struggling to meet rental payments in the final three months of 2010.
* If you use a letting agent, only use a licensed agent – lettings is an unregulated industry, so the only way of ensuring that your agent will follow strict codes of conduct (and that there is a route to redress if they do not) is by checking that they are a member of a reputable organisation like ARLA. Also check that any funds being held by an agent on your behalf are protected under client money protection schemes.
* Sign up to Deposit Protection – this has been mandatory for all landlords since April 2007, so worth factoring in to the process. Tenancy Deposit Protection legislation requires all deposits on all Assured Shorthold Tenancies to be protected under a scheme licensed by the Government. For more information, visit the Communities and Local Government website.
- Our Online Property Search Engine – including properties to let
- The Association of Residential Letting Agents
- National Landlords Association
- DirectGov: Renting Out Your Home
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