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How to choose a buy to let property

Our guide on what to look for when choosing a buy to let property.

How to choose a buy to let property

In some ways, purchasing a buy to let property is no different to buying a house you intend to live in. Many of the major steps are the same – house viewings, hiring a conveyancing solicitor, having the property surveyed… but remember that purchasing a buy to let property is a business investment, and so there are a few key differences, particularly to the viewing process.

Buying a home with the intention to let it out requires a totally different mindset when looking around the property. When you’re looking for your new home you want to find somewhere that ticks all your boxes, but it also has to ‘feel’ right.

When looking at buy to let properties you must make sure your head rules over your heart. You’ll have to consider factors that might not be important to you or make decisions based on statistics and trends instead of what you think. You might love the idea of living a little off the beaten track, but as a general rule people want to be close to amenities and public transport. It’s these general rules that you must prioritise.

But what do people want? We’re here to help you know what to look for.

General guidelines

When you’re just starting out, consider these things:
 
  • Make sure the age of the property balances cost and maintainability. Older buildings can be harder to maintain, but they might free up more budget for renovation, and if they’ve been on the market for a while you might be able to get the price down further. A new build can be more expensive, but is often a safer bet, depending on the location and the quality. The character lent by an older home might be beautiful, but for rental it may not be worth the hassle. Think carefully about how to balance these differences when it comes to the type of property you think tenants would want.
  • Check the condition. You should sort out any defects with the property before you rent it out, so it’s good to have the condition checked to make sure there won’t be too much of a delay in receiving your rental income. Getting a great deal on your survey means you’ll have more budget to work with, so get quotes from up to five chartered surveyors.
  • Make sure the house is sellable. Remember that most buy to let mortgages are ideal for reselling once the mortgage term is up. Many of them work on an interest-only basis. Bear in mind that you might end up wanting to sell the property even if you didn’t initially plan to. All kinds of things can affect the resale value of a property, like location, parking and how eco-friendly it is. Be sure to take into account any future planned construction as well – for example, if buying in London, will the construction of HS2 affect the price of the property?
  • Check out the internal specification of the property. Whilst it might not be worth breaking the bank with renovation, the interior of the property must be clean, functional and easily maintainable. If you’re willing to do renovation work, go for simple but clean and functional.
  • Be savvy with your viewings. Make sure you visit at different times of day, to get an idea of light, traffic and noise – a property might be bright in the morning but gloomy in the afternoon, or nightmarishly busy during school run hours but otherwise peaceful. Read more of our house viewing tips – but remember, you’re not looking for you.
  • Perks in the area. Look for things like whether the local area is lacking in parking, whether it’s rare to find a family home, or if it's advantageous to be near transport links.

Your buy to let property must suit…

Your budget

Having a budget is really important – this is a business investment and it must be treated as such. Your rental income must exceed the costs in the long run. Remember to include maintenance, renovations, insurance, agency fees, mortgage fees, landlord insurance, legal fees (you can get quotes from conveyancing solicitors to make sure you’re getting the best deal), mortgage repayments, and the cost of the property being empty between tenancies.

Also, remember that if you already own a home then you'll pay extra stamp duty on your buy to let property. Use our stamp duty calculator to work out how much you'll need to pay.

Landlord insurance can protect you from a range of things like accidental or intentional damage, periods with no tenants, or tenants being unable to pay their rent, but you might still have unforeseen costs so its best to have a financial buffer in your budget as well.

In order for your budget to be realistic you must be able to accurately predict the rental income a property could bring in. The figure will depend on the location, size and type of the property. Research similar properties nearby. How much is their rent? Are they snapped up quickly? You can view local information for properties on websites like Zoopla and Rightmove. Keep an eye out for any regeneration plans or future transport enhancements.

You

Your property does not need to suit you in the sense that it has the quirks and ‘feel’ you like, but you must consider whether the house and its associated responsibilities suit your role as a landlord.

Think about:
 
  • How much maintenance you’re willing to do. Is the higher maintenance worth it for the character? Or is it better to go modern?
  • How hands-on you want to be. If you want to be fairly involved then the property must be near to where you live. Be careful not to compromise on other things here – there are many advantages to going with your hometown but make sure you’re not biased. Your tenants have to love the area too!
  • Leasehold properties. If you’re investing in a leasehold property you need to ensure this suits you and your plans. Check how many years are left on the lease and read the small print carefully. Particularly look out for any restrictions, e.g. subletting or letting to students. Make sure you understand what your responsibilities as a leaseholder are. Consider whether you can pass on some of the extra fees associated with leasehold (ground rents etc) or if you’ll shoulder the cost, or split it.

The mortgage broker

Check the property is a safe bet for securing a mortgage. Some properties are considered a risk because they’re harder to resell, such as houses of multiple occupation, ex local authority properties, properties above commercial premises, and high rise developments. As a result, it might be harder to secure a mortgage for them.

But most importantly – your tenants

Begin by planning who you want to rent to. Families? Students? Young professionals? Talk to letting agents and ask them what people tend to look for and how much they’re willing to pay. Use this information to put yourself in your tenant’s shoes right from the start. Then make sure…

The location is right

Students might want to be near campuses and within walking distance to clubs and bars. Families might want to be near schools and green spaces. Young professionals might want to be near public transport. What do your tenants want to be near to, or far away from? Consider local crime and noise levels as well as schools, supermarkets, public transport, local hospitals and GPs, universities, pubs and clubs, and open spaces.

The type and size of building suits

The type of property your tenants are looking for will vary depending on who they are. Small flats are ideal for single people or young couples whereas large houses are better for families or house shares, depending on the layout.

The layout is ideal

Your layout must be suitable for the tenants you’re trying to appeal to. Got friends or family who are part of your target demographic? Ask them what they’d be looking for! Student houses might need a big communal area and lots of private bedrooms, whereas families may want a more open-plan home but with more storage (such as an attic or garage).

The outdoor space is appropriate

Families might want a big garden whilst students and young professionals will want outdoor space that doesn’t need maintaining, for example a patio or even a balcony. Also, whilst students or public transport commuters might not be too fussed about parking, for families a lack of it may be a dealbreaker (and it can push up your rental income, especially in city centres).

The building age is right for them

New buildings with modern interiors can be appealing, especially for young professionals or those looking for relatively short-term leases. But older buildings can be full of character and might be appealing to families or people who intend on renting it for a long time. Targeting these types of tenants also reduces the number of times the property is empty between tenancies, but the house might be more expensive to maintain. It all depends on who you’re looking to attract.

It can feel overwhelming having to make pragmatic decisions instead of being governed by your own feelings and opinions. But as long as you know who you want to rent to, you do your research about what they want, and you look after them once they’re there, you can’t go far wrong.
 

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