Five tips to property owners in the UK

The market rent of residential property in the UK is on the rise today. Market indicators have reached the peaks of their pre-crisis heights. Many investors perceive market potential “buy-to-let” (buy to rent) as the most attractive from the point of view of investments in conditions when the majority of the stock markets experience volatility.

However, to be a property owner in the UK – the Landlord – is not as easy as it seems at first glance. Usually in practice most landlords making the same mistakes, taking the path of the owner. Therefore, we are summarizing the most common mistakes, have prepared this small reminder for those who are just about to embark on the path of property owners in the UK.

1. The location of the future object of your property is the most important factor. For many, it becomes a surprise that the most popular in the UK, postcodes are not always able to obtain a stable and high rental income. For example, the average annual rental income in areas such as Kensington and Chelsea only 3-4% but the buyers of real estate in these areas receive a large capital gain, which is the cause of investment. And certain areas of the UK where the cost of real estate is low and demand for rentals is huge, allow to obtain an average of 7-8% of net rental income. Therefore, it is necessary to keep in mind that careful study of the potential of the area where you are going to acquire the object of your investment is the first thing you need to make the buyer “buy-to-let” .

2. If you are going to use a mortgage do a thorough analysis of mortgage products offered by banks. Fortunately, lenders are now offering a whole lot of mortgage products in the rental market. But it is important to calculate all their payments until the end of the period, because many of the agreements with the banks provide for a fee increase. When purchasing mortgage products definitely can recommend additional service called “additional coverage for landlords”.

3. The next step is the insurance. Insurance for landlords is a widely used service on the market financial products in the UK and it is important that it covered the West the value of your investment. First, we must not forget to insure the liability to third parties, including any damage that may be caused to other tenants. Unfortunately, the basic insurance contract owners will not work if your tenants don’t pay rent. Therefore, you in your insurance agreement is recommended to include an additional guarantee in case the object will be idle without tenants.

4. The management of the property. In this part you have two options – you manage your properties yourself, or do you trust her in the management of the company. In case of refusal of the management company, you save on commissions paid to the management company, but have no direct control over the tenants and solve all the questions. This means that you assume a lot of trouble. You have to arrange warranty service for your tenants in case of breakdown of any equipment, regularly to take rent and periodically to communicate with your tenants. If you trust all this to the management company, you will have more free time. But for the service management companies usually take no more than 10% of the cost of rent.

5. And last is the choice of the tenants themselves. You need to choose tenants which is right for your home. For example, a young professional couple doesn’t need a house with five bedrooms. Them likely to be interested in modern apartment with excellent transport links. In addition, it is recommended to meet your tenants face to face and listen to your intuition, do you know each other before taking the final decision.

® Helen Entree. 08.08.2013