By Steve Roulstone
There have been several questions asked and answered in the press lately, covering several aspects of buying a property to rent. So I have decided to write down what we at Castle Estates consider to be the most important matters for consideration when buying a property for the rental market.
Parts 1 through 4.
I will be writing the Guide in four parts dealing with what to do from the start to completion. This is not meant to be a comprehensive list, rather pointing you in the right direction. Other matters are bound to arise as you progress through financing, choosing an Agent, dealing with Insurance and then finding the property and making comparisons to decide which property is best value for money.
Part 1; Choosing your Finances, Insurance, Accountant and Agent.
Before you even arrange your first viewing of a property, it is a good idea to ensure firstly that you have the right finance to be able to purchase a rental home, especially with the current mortgage availability. Size of deposit will be crucial and by speaking with a mortgage broker (always better to ask your friends for a recommendation if you are unsure, you will be surprised just how many are also Landlords!) you will get a feel for exactly what calculations are needed to ensure the mortgage will be covered by the rent.
Insurances.
It is popular now to call Buildings Insurance for a rental property Landlords Insurance nowadays. It is not, it is Buildings Insurance, but you would still be better to speak to those who specialise in the rental market rather than mainstream Insurance providers, who always seem to offer Landlords Insurance as a premium. Some Mortgage Companies now insist on their own Insurance policies, ensure you are aware before committing to a mortgage what the cost is. It could make your mortgage less competitive! There is also proper Landlords Insurance to be considered. Your Agent will assist here, but Industry recognised meaning of Landlords Insurance is a policy that offers Guaranteed rent if the Tenant fails to pay the rent and Legal expenses to remove the Tenant as quickly as possible and of course, using Industry specialist experts to carry out the role!
Accountants.
Unfortunately, Income from your rental property is taxable. Therefore you should seek advice from an Accountant so that your income is properly accounted for at the end of each year. When this additional income is small, I know that some consider an Accountant to be a cost they could do without, but speaking from experience, I have never been disappointed by the savings they have been able to make, compared with the cost of ensuring you are legal with the Taxman. By law, we have to advice Income tax offices of every penny paid to Landlords each year. Therefore if the taxman knows what has been earned from the property, it makes sense to ensure you have claimed against every bit of allowable expenditure you can. The best person to do that for you is an accountant!
Agent.
Well I would suggest Castle Estates wouldn’t I! The legality surrounding this market means that we would suggest a professional Letting Agency to look after your property. In short, these are some of the reasons why; Ability to credit reference Tenants, Regular property visits, Time served arrears chasing systems, Knowledge of the industry and the law, Professional Inventories, Professional agreements and clauses and a network of Maintenance Contractors. What you need to do is choose one before you start. Make sure they are associated with a professional industry body and belong to such organisations as Safe Agent and The Property Ombudsman. After all, they will be able to advice you at every turn and all at no cost until such time as you yourself are earning from the property. (A genuine case of free advice)
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