Increasing demand for rental properties is creating a new investment opportunity for first time landlords in Leeds, as figures from ARLA show 55% of lettings agents believe demand for rental property is now outstripping supply.
ARLA state that investing in a buy-to-let property has always been an attractive opportunity, and the high demand for rented property means there are a growing number of first time landlords in the market, however letting out a property can be a complicated and daunting process. ARLA has set out the essentials for first time landlords on what they should consider before investing in a buy to let property.
Ensuring buy to let property works, takes a lot of commitment and hard work, but can be rewarding in the long term. If you’re a first time landlord, it’s crucial that you look for a licensed local agent to promote your property, and potentially also manage it.
For anyone considering renting out their property, ARLA has the following top tips to help make the process as smooth and trouble-free as possible:
1. Invest wisely: Do your research and make sure you find properties that are in demand in the local market. You’ll also need to compare rents with similar properties in the area, taking into account any points of difference or factors that may have an impact on the likelihood of you receiving that monthly return, such as proposals for new roads or housing in the area.
2. Find a licensed agent: Particularly if you’re new to renting, but even if you’re not, it’s crucial that you look for a local agent who abides by a code of practice and importantly, is subject to a redress scheme, and offer client money protection like all licensed ARLA members. This will ensure you receive strong and independent advice and, equally importantly, that your money is protected.
3. Be realistic about void periods: ARLA data shows that rental properties are untenanted for an average of 3 weeks. But, it is advisable for first time landlords to budget for 8 weeks per year to cover times between rental agreements. If your void periods are less, the extra return is a bonus.
4. Be competitive: Make sure the property presents itself well to the market in terms of the décor, the condition of the furnishings and also the mechanics of the house – such as the heating. You’ll be amazed at how many properties fall down on simple things like this so it is wise to make the most of the opportunity and get the property to the best standard. You’ll also need to ensure you comply with all health and safety requirements for gas, electricity and furniture and furnishings
5. Check up on tenants: Make sure you have sufficient information about your prospective tenant to ensure you can assess the risk 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
6. Insure yourself against risk: Ensure you have specialist buildings and contents insurance covering the items you own in the property – without a specific reference to letting you may be uninsured. Also, consider insuring against the tenant defaulting. This normally covers both rent and legal expenses.
7. Compile an inventory for the property: Prepare a full, detailed inventory of the property to include a schedule of condition of all the contents as well as walls ceilings doors and other fixtures and fittings – just to make sure there are no surprise claims, or better still get a professionally prepared independent inventory from a member of the Association of Professional Inventory Providers.
8. Don’t be lazy: It’s important to hold onto tenants for as long as possible – but that won’t happen if they receive bad service. As a landlord, you are essentially a caretaker for the property, and need to service it when required accordingly
9. Do you need a licence?: If the property is to be used for sharers, check whether you require a licence from the local authority. If the property is in Scotland you must register as a landlord for any property with the local authority
10. Deposit protection: Since April 2007 it has been mandatory for landlords to comply with Tenancy Deposit Protection legislation, which requires all deposits to be held by a third party and not by the landlord. For more information, visit the DirectGov website www.directgov.uk. This requirement is likely to be introduced in Scotland very shortly.
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