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7th December, 2015

Golden rules of buy to let

Golden rules of buy to let

Are you thinking of becoming a landlord or just want a practical checklist when viewing potential properties? Here are our fifteen buy-to-let top tips.

Following news that a block of flats in the East Midlands was snapped up by crowdfunding investors in just over 10 minutes, it’s clear that we haven’t lost our appetite for buy to let. We have come up with lots of tips and advice in our new mini guide to the world of property rental.

1 Layout

Oldbury Place (2)

Most modern apartments and houses will have fairly straightforward layouts, while older buildings may have awkward chimney breasts, stairs and rooms through rooms. If you can change the layout fairly easily, that’s a good way to increase its appeal to tenants. For example, it’s often worth moving a bathroom upstairs from the lean-to at the back, or creating a kitchen/diner from a small galley kitchen and dark back room. Stick with what people expect.

Top Tip: for a one-bedroom apartment, a good layout includes plenty of storage, a double-bedroom, a bathroom entered through a hallway (not a bedroom), a large living room, open-plan kitchen or separate kitchen.

2 Size matters


This depends on your target tenant. If you’re after a single professional, you might consider a small flat, maybe even a studio, in a good, central area. If you want a family, for a longer-term let, you might look at three-bedroom properties, a larger home with more square footage, or a house in central London or the suburbs. Studios, or one and two-bedroom flats are often easier to let and appeal to a wider audience.

Top Tip: floor level is not as important as layout, but always buy on the first floor upwards. This is for added security. A one-bedroom property should be a minimum of 500 sq. ft. to achieve the best yield. A two-bedroom property should be 800 sq. ft. to achieve the best yield.

3 Cash to spend

So you’ve got a bit of money in the bank and it’s not gathering much interest. If stocks and shares are an unknown country to you, maybe bricks and mortar is the answer. First of all, do your homework. Decide how much you’ve got to spend, whether you can do any repair work yourself, whether you want to deal with the tenant yourself and how much it will cost if you don’t. Research mortgage options and calculate your likely profit. Only then are you ready to go out and start spending.

Top Tip: expect to pay from £500,000 upwards for a one-bedroom apartment in London. A two-bedroom apartment will cost between £700,000 – £800,000. Outside London, you can pay anything from £250,000 for a one-bedroom property and £350,000 for a two-bedroom property.

4 Location, location, location

St Catherine's Mews

Obviously you know your local area best and if you can afford to buy in it, then that makes things easier. If your own area is too expensive, then look further afield. Key to a great buy-to-let is having it somewhere where people want to live. A city centre location, close to transport links or handy for shops – all these will help drive tenants to your door. You might have to weigh up negative aspects against the initial price, but remember that a takeaway restaurant next door will limit your rental income even though the property might seem to be a bargain. However, it’s worth considering a cheaper road near to a popular area as the rent will be the similar.

Top Tip: look out for commuter hot spots (near good transport links: bus routes or tub stations) along with high-end stores: Waitrose, Tesco, Sainsbury’s or Starbucks.

5 Add value


Even if it’s not going to add to your rental income, it’s often worth making improvements such as those mentioned above. They’ll add value when you come to sell, and they’ll make the house easier to let. Other improvements to consider include double-glazing, a new bathroom or kitchen, and creating extra bedrooms. Spend money on making it as maintenance free as possible which will save money in the long run.

Top Tip: windows are a key selling point in homes. Look for a buy-to-let property with larger windows – more the merrier, too.

6 Talk to the professionals

Will you be doing the work yourself or employing tradesmen? Weigh up the cost, the time it will take and whether you are capable. Unless you are used to DIY, it’s probably quicker and cheaper in the long run to get somebody in. Boilers and electrical work will need to be signed off by a suitably qualified person. Cheap workers who are available immediately might not be the best option. A skilled worker can often do the work in a fraction of the time. Get recommendations from friends, if possible.

Top Tip: always get three quotes for potential work and weigh up the costs carefully. Personal chemistry is important, too. You want to get on with your builders, electrician or carpenter.

7 Decoration

Green Street, Mayfair (5)

Don’t spend too much money on the decoration. You won’t be living there. Unless it’s a top-end property, avoid expensive and unusual finishes. White paint is cheaper to buy and saves time because you don’t have to cut it in around the edges. New carpets throughout can change the feel of the property. Add a decent underlay, haggle a little, and you can achieve a good-looking finish without an enormous outlay. Replace avocado bathroom suites or damaged kitchens. You might get away with new cupboard doors and fresh grout in the bathroom. Clean up or replace socket fronts, light switches, knobs and taps and the property will look as good as new.

Top Tip: most homes these days go for polished chrome door furniture and light switches. Some owners are reverting back to pure white light switches and plug sockets, too. But talk to your local DIY store to find out what is fashionable in your area.

8 Presentation

Base Interiors Green Street 22nd July 2014

Give everything a good clean. Bathrooms and kitchens should be sparkling. Doors and windows are easily wiped down. If there’s a garden, clear it. If you’ve got time to seed it, do that. If not, use turf, decking or tidy up existing paving. Replace fences and fix broken glass in sheds. Kerb appeal is crucial when you are selling a house and tenants are no different to buyers in their responses.

Top Tip: if you are looking to purchase an apartment in a mansion block, find out about any proposed works, including scaffolding. Do your research before buying.

9 Yield

Aim for around 6 per cent. Interest rates will rise at some point, so you must have some leeway. You will still have maintenance, agent’s fees, boiler servicing and repairs, too. In London, you need to get at least 2 per cent and hope for capital appreciation. If you are getting a BTL mortgage to finance the purchase, you usually need about 25 per cent for the deposit. At the moment, there are many loans available on the High Street, if you have a good credit rating, but watch out for high initial fees.

Top Tip: aim for at least 2 per cent yield upwards in central London. Aim for 4 – 6 per cent outside the capital. But seek advice when looking for a mortgage. A reliable estate agent and mortgage broker will be key.

10 Local regulations

Green Street, Mayfair (8)

While landlords with HMOs have to be licensed, some councils ask that all landlords are and charge them per property. Croydon, for example, charges £750 for a five-year licence. With Wales apparently bringing in a compulsory registration scheme this year, it’s likely that a general landlord tax will creep across the country. Bear that in mind when you make your cost calculations.

Top Tip: check whether the property has any restrictions on parking. Some buildings don’t come with the option of securing a parking permit, known as “parking exempt”. Talk to your estate agent or local council.

11 Leasehold or freehold?


Freehold is always better. It means you have more control. In theory, leasehold could mean maintenance charges are spread across the building and in practice it may mean you have to deal with somebody else to get things done and agree costs. Read the lease carefully and aim to have at least 100 years left on it. You might not get a mortgage if it is less than 70 years. Renegotiating the lease should be a condition of the sale if you are in a good position to buy.

Top Tip: some lenders do not like to provide a mortgage for a buy-to-let property in council estates. Always check with your bank or building society, just in case they have any restrictions. It is far better to raise any problems when you have time on your side. Don’t leave it to the last minute.

12 Hidden costs and void periods

You need to be able to cover your costs if the property is left empty for a couple of weeks or months, or if the tenant gets into rent arrears. If the tenant fails to pay the rent, it may take months to get them to leave. You can get landlord insurance to cover this. And once the tenants have vacated, you might find you need to redecorate before you can let the property again.

Top Tip: void periods can be avoided, but it takes careful planning. Beware: potential tenants who make quick decisions when looking around a property. Generally, the deal will fall through. If genuine, the tenant will pay a deposit straightaway.

13 Furnished vs. unfurnished


This depends partly on the type of property you are letting. But if you are going to furnish it, you need to be aware of fire regulations. That means you can’t just go down to the junk shop and buy a sofa. You need to be sure it conforms to fire safety rules. Check labels. You also need to consider durability, so buy soft furnishings with removable, washable covers. Mattresses can be covered, too. You will also need to fit carbon monoxide and smoke alarms. Tables, cabinets and wardrobes shouldn’t be too flimsy. Make sure the property is safe, reliable and comfortable.

Top Tip: keep the decoration neutral, too. If you want to be adventurous, then accent walls can add a stylish tone.

14 Tax and capital gains

Make sure you’ve factored in paying your taxes correctly and don’t forget you’ll be charged capital gains when you sell the property. You’ll also find that improvements you make to the property before any tenants have moved in are not liable for immediate tax relief. Save your receipts as you can claim against tax when you eventually sell. Redecoration between tenants, however, does attract tax relief.

Top Tip: make sure your accountant knows the industry, so they can advise. Talk to your estate agent, too.

15 Good relations

Green Street, Mayfair (9)

It is key to get on with your tenants. Meet them before signing anything, even if you are employing an agent to manage the letting. It helps to visit them in their current home. It will tell you how they are likely to look after your property. But treat them well, and communicate effectively, then you are likely to find the sentiments reciprocated.

Top Tip: communicate, communicate, communicate. Good communication is the key. Visit the property about every six months to check your tenants are happy.

Are you thinking of getting on the buy-let-ladder, looking to let a property, rent an apartment or just need advice, call your local Fine & Country office or visit fineandcountry.com.

Useful websites and organisations for more advice

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