How To Make Money from UK Rental Property

rental property

It is no secret that money can be made from the UK property market, especially if you happen to be a landlord. However, it is not as easy as most think, and you do have to understand a few fundamentals to make it work. Most who haven’t tried being a landlord are under the impression that you can make money hand over fist month after month, whereas in reality, this is far from the case. Nevertheless, by following a few very simple rules, even a total novice could make a tidy nest egg over a period of time.

#1 Know what tenants in the area want

When you decide that you would like to become a landlord, you will have to do your research before purchasing any property. Getting the area right can be a crucial part of whether your property rental business will be a success or whether it will fail miserably (and expensively). You should make sure that you are not only getting your location right but also the style of property.

For instance, if you are looking to rent to families, then you should be looking for areas that have plenty of work, good schooling close by, and properties that are large enough to house a family in. A lot of parents like the idea of having a garden for their children to play outside in the fresh air rather than keeping them cooped up indoors, or if the gardens are small or non-existent, then the addition of a park close by could be a good compromise.

If, on the other hand, you are looking to rent to young professionals, then you are going to want to look for nightlife, entertainment, food venues, as well as gyms, and transport routes to where they are likely to work.

#2 Purchase property you can afford

It is important to know what you can afford to buy and not to overreach your boundaries. Recent years have shown that mortgage rates can rise rapidly, and if you can’t keep up with the repayments, your mortgage lender can still repossess the property – even if you have a tenant (they just become a tenant of the new owner until their agreement expires). Of course, there are a lot of mortgage deals around that will ‘lock’ you into fixed-rate offers, but it is essential that you take your time to choose the right one for you and your circumstances and, where possible, speak to a financial adviser so you understand exactly what you are signing up for.

#3 Ensure you have quick turnarounds

Once you have the desired property and the mortgage that you can afford, you are going to have to move quickly to get it ready for renting. Every day that your property sits empty costs you. This is because your mortgage will still need to be paid, as well as any electricity and water bills accrued during the time that the property is being worked on. You will also have to pay any labourers for work that they are completing on your behalf.

Of course, over time, as your property portfolio grows, it could be that you have your own source of labourers solely working on your properties, but at the start, this is less likely to be so. Scheduling different groups of builders, electricians, plasters, gas engineers, and even glaziers and the materials that they will need to get the property ready for tenants can be a headache to someone who has never had to do this before, especially when you will find that one group will rely on others work being completed before they start theirs.

#4 Enlist the help of letting agents                  

Although some landlords like to do everything themselves, it is far easier to enlist the help of letting agents who take control of the vetting, letting, and termination of a contract. This is because they know the letting laws and are used to dealing with tenants (and landlords), and sometimes, it can be exceptionally handy to have someone doing the negotiating, especially in times of friction.

Of course, there are ways in which you can lessen any chance of there being friction within the tenant/landlord relationship. This is mainly understanding when should you carry out tenancy inspections? and keeping an eye on how your property is being treated, as well as how your tenants are doing in your property, is a good idea. Any issues or problems can be dealt with at the start rather than having them grow or mount up into an unmountable breakdown in confidence, care, or communication, which will help everyone involved have a good rental experience.

#5 Opt for yearly letting terms

It is likely that you have dreams of letting your property go to long-term tenants who will constantly pay the rent and will look after your property as if it were their own. However, you have to be careful with this, and you could find that it is far better to let your property on yearly terms. This is so that you can let to your tenants on an ongoing basis (whether you want them living in your property for another year), adjust rental fees to cover mortgage costs, and, when the term is coming to an end, provide yourself with a window to carry out any work on the property to keep it well maintained and in good order.

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