1. Location, location
Do your research and talk to a specialist lettings agent before buying. The agent will be aware of local property hot spots, purchase prices and rental valuations.
Specialist local knowledge is invaluable, as Major Mahil of Belvoir Birmingham Central and Belvoir Erdington explains: “In this area there is more capital growth in a two-bedroom house than a two-bedroom apartment. A two-bedroom house currently costs around £60-70,000 and although they achieve lower rents the capital growth is higher. A two-bedroom house in this area typically rents for around £550-£575 per month.”
2. Minimise your mortgage
Research the best buy to let (BTL) mortgage deals. Belvoir is a specialist lettings agent, but landlords who visit local offices can use a free on-line BTL mortgage finder, enabling them to search for a mortgage to suit their individual circumstances. The absence of broker fees means landlords can potentially save money as well as time.
3. Stamp out stamp duty
Buying an investment property for less than the stamp duty threshold of £125,000 will save you 1% of the purchase price.
Lee Shuell of Belvoir Oldham and Belvoir Ashton under Lyne says: “In Oldham and many other parts of the country a two-bedroom house can be purchased for between £50-80,000. In the right area these can be excellent investments as they will not incur stamp duty and can rent out quickly with a fantastic yield.”
4. Fair fees
Conveyancing fees vary, so shop around for the best deals. Searches can average about £200 per property and land registry fees depend on purchase price – for more details visit: www.landregistry.gov.uk.
Landlords can minimise accountancy fees by being as organised as possible with books and receipts.
5. Negotiate insurance
“Contents and buildings insurance on houses is generally more expensive than apartments, as block management enables the negotiation of a better deal,” says Major Mahil. “Rental guarantee insurance is pro-rata but will probably average around £200 per year.”
6. Renovation advice
A specialist agent can advise on decorating requirements, saving money on unnecessary work.
“I tell landlords not to spend any money until we have a potential tenant,” says Lee Shuell. “Their taste in decor may not match the tenant’s who may ask to change it. Whilst a property must be clean and in good order to attract quality tenants there is no point in spending unnecessary cash.”
White goods, however, can add value. “A cooker, washing machine, dish washer and fridge freezer are great selling points and help attract better tenants more quickly,” says Major Mahil. “In this area unfurnished houses are much more popular than furnished, although people still want furnished apartments.”
7. Contractor fees
"It is a legal requirement for landlords to obtain gas safety and energy performance certificates (EPC’s) on their rental properties," advises Zain Mahal of Belvoir Stratford. "In addition all electrical installations and electrical appliances must be safe for use and electrical safety and portable appliance test reports must be provided. No tenant should be allowed to move in until these safety checks are carried out.”
A specialist agent can save landlords money by negotiating fees with contractors.
8. Save on voids
A specialist lettings agent will help to minimize voids by professionally marketing your property. Landlords are advised to maintain a contingency fund of two month’s mortgage payments to help guard against occasional late payments, void periods or necessary repairs.
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