Chiswick is a good area for a buy-to-let investment as plenty of people are looking to rent in and around W4. The skill is to buy your investment property at the right price, ensure you achieve the best rent, and find good tenants.
A new
report ‘
YouGov SixthSense Buy-to-let: Landlords and Mortgage’ reveals that the buy-to-let market has shifted from long-term investors to more novice players with three distinct profiles emerging: ‘Investors’, ‘Good Parents’ and ‘Reluctant Landlords’.
It is important that landlords have realistic expectations of likely returns and their responsibilities regarding regulations. Speaking to an Association of Residential Lettings Agent (ARLA) such as Chiswick’s fixed fee lettings agency OliverFinn, will provide
landlords with expert insight into the risks and responsibilities involved.
According to the
YouGov report, ‘
Investors’ are still predominant – 76% of all landlords own a rental property with this as the main motivation – but they have moved towards shorter-term gain. In 2013, 56% of new landlords consider their buy-to-let property as a short-term investment as they look to capitalise on low interest rates and schemes such as the Government’s Funding for Lending programme.
‘
Reluctant Landlords’ – homeowners forced to rent out their homes because they’ve had difficulty selling – have increased since the downturn. Twenty eight percent who entered the market in 2012 did so reluctantly with at least one of the properties they owned.
‘
Good Parents’ who have acted to provide financial support or a financial legacy for their children, now account for 29%)of the market.
ARLA has prepared the following top tips for each of the landlord categories identified:
Investors
- Do your sums. Arrangement fees tend to be larger than those of residential mortgages and so do deposits. Factor in all costs and be realistic about the rent you will achieve.
- Factor in void periods. The latest research from ARLA shows that average void periods have increased from 2.9 weeks in the first quarter of 2013 to 3 weeks in the second quarter.
- Talk to your local ARLA agent to see what type of tenant your property is likely to attract, then tailor the property to the tenant’s needs and tastes.
- Aim at a specific market, whether it’s students, young professionals, corporate tenants or families. Different markets will have different needs; students will need clean and basic accommodation; young professionals might not want the hassle of a garden and will want to be near good transport links; and families will expect the house to be of a high standard and not too far from schools.
- For the investor looking to take on a bit more risk to increase their returns it’s always a good idea to try and identify future hot spots. Keeping up-to-date on regeneration plans and new transport links provide opportunities for house prices to increase above the average rate.
Good Parents
- Be aware of the risks and plan for interest rate rises to ensure you will still be able to afford the repayments.
- Put yourself in the tenant’s shoes. A good location where people would like to live will improve the chances of occupation and demand for your property.
Reluctant Landlords
- If your only option is to rent your own home then talk to an experienced and accredited letting agent. Get a good idea of the rent your property should achieve, find out about the legalities, regulations and obligations that apply to landlords and tenants.
Whatever your motivation, with any property you rent out you need to make certain that you follow all legal requirements and building regulations.
