What every landlord needs to know.
As a former landlady of a buy-to-let property, I know all too well that landlords need to be super organised, and fully understand the financial and legal responsibilities that come with property ownership. The first challenge of being a landlord is asking whether you want to do everything yourself or delegate the burden? In addition, landlords need to do their financial homework before making any buy-to-let investments. They need to work out their expected income and expenditure as well as profit margins from the rental yield. This is particularly important if you have a buy-to-let mortgage secured against your property rather than owning it free and clear. Can you afford to make mortgage repayments when your property is untenanted - do you have a sinking fund for repairs? The list can be endless.
So, what do you need to think about as a landlord?
Property can be a fantastic long-term investment as long as the day-to-day demands are taken care of, either directly, or even better through hiring a property virtual assistant team like us who can take care of the everyday rental needs.
Location is premium
Once you have decided on the location for your buy-to-let property, you need to do your market research on the best rental yields for the area. At Libra VA Services, we can help you with your research on areas and the best rental properties for your portfolio by spending the hours you don’t have on property search engines, and booking calls with local agents. It is important to view a significant number of properties to ensure that you are making the most informed decision for your budget and future investment as there are many considerations both in terms of financial goals and proposed length of ownership.
There are two questions that you need to ask yourself before investing in property:
What are your short and long-term financial goals?
How long do I intend to own this property?
The first question relates to your ‘why’ and reason for investing. Increasingly, UK buyers are viewing property as a pension investment which isn’t always the best option as it may not yield the highest return in the years to come. Like with any financial product, you need to seek independent financial advice to work out whether it suits your goals. I certainly wouldn’t recommend a buy-to-let property for short-term financial gain, unless you are in the investment world and you truly know what you are doing. You need to do the maths and work out whether the rental income will meet the mortgage repayments, otherwise, it will not provide you with a passive income in the short term and could end up costing you thousands per year!
Should you self-manage your property?
There are pros and cons to self-managing your own buy-to-let property and it can be done if you have a dedicated network of tradesmen and suppliers, as well as living close to the rental property for being on hand for urgent call-outs. As well as the day-to-day operations of running a property, there are other tax implications to be considered and an experienced accountant is strongly advised. The upside of self-management is that it is cost-effective but is it time effective? As busy working professionals, you have to weigh up the cost-benefit analysis as it can be a costly drain on your time and energy if you are having to deal with emergency issues after a long stressful day at work, or even worse during unsociable hours on the weekend which impact on your home life. If you are needing ad hoc support for tenant liaison service or booking repair work, then we can be of service.
Building a network of local and reliable tradesmen
You are already at a massive advantage if you have done your homework on the area. Recommendations or referrals are the best way to go for finding local tradesmen as you know they have done a good job previously. Finding a good, reasonably priced and trustworthy tradesman is no mean feat. At Libra VA, we help local landlords to source tradesmen for maintenance and repair work. If you live further afield, we can certainly advise you on the best online sources and where to look, as well as researching on your behalf and making any relevant bookings.
Legal responsibilities of being a landlord
The law is constantly changing in regards to landlord and tenant clauses. One of the services we provide at Libra VA is a legislation update for landlords, notifying them regarding any changes in the law. The general governmental guidelines outline that landlords must adhere to the below current regulations which are accurate at the time of writing for England and Wales:
keep your rented properties safe and free from health hazards.
make sure all gas and electrical equipment is safely installed and maintained.
provide an Energy Performance Certificate for the property.
protect your tenant’s deposit in a government-approved scheme.
check your tenant has the right to rent your property if it’s in England.
give your tenant a copy of the How to rent checklist when they start renting from you.
Day-to-day costs of running your property
Aside from covering the mortgage repayments, you will need to think about a sinking fund for urgent maintenance and repairs. There are monthly plans available for landlords for insurance policies to cover things like boiler and heating breakdowns. It is certainly worth doing extensive homework on comprehensive policies to cover the main areas. If you don’t have a boiler cover, for example, you can expect to be hit hard with an ad hoc engineer call-out charge in addition to the labour and parts. In regards to other costs, you will need to pay a monthly premium for landlords’ buildings and contents insurance which averages anywhere between £70-100 per month. The tenant is responsible for utility and council tax bills whilst in situ, but it is a good idea to budget for these additional charges if your property is ever vacant. At Libra VA, we can help research the best insurance and policy deals for you as a landlord to ensure you are getting the best deal and not being out of pocket.
Find out here how Libra VA can support you with property administration and ease the struggles of being a landlord: https://www.librava.co.uk/specialist-services