Becoming a landlord

Those buying second properties (including landlords) have to pay 3% in extra stamp duty on top of the usual rates when buying residential property.

So when working out the costs of purchasing a property to let out, remember to factor these extra costs in.

Much like buying a home to live in, your deposit really matters. When applying for a buy-to-let mortgage you’ll have access to a much wider choice of mortgages and better rates if you can afford to put down a larger deposit.

When working out how much you can borrow, a lender will measure the property’s rental income as a percentage of the mortgage payment. This will have to meet a threshold set by the lender.

They will also expect you to prove you can afford to cover payments when you don’t have a tenant or if interest rates increase.

If you’re considering buying a property to let out, think what sort of tenants you want to attract.

For example, if you want a professional couple, you’ll need a property that’s close to good transport links. If, however, you want to attract student tenants, you’ll need to be as close to a university or college as possible.

It’s often a good idea to buy property near where you live if you are looking to become a first-time landlord. Not only will you know the most popular places for people to live, but you’ll also be on hand in case anything goes wrong with your property, such as emergency repairs.

At some point it’s likely that your buy-to-let property will sit empty for a few months, known as a ‘void period’. You’ll need to make sure that you can cover your mortgage during these times, so it’s a good idea to have a savings buffer available that you can draw upon when you need to.

Many landlords don’t want the hassle of having to find tenants and so rely on a letting agent to do the hard work for them.

When looking for an agent, always check out two or three and compare costs so you find the best possible deal. Make sure you’re clear on exactly what you’re getting for your money, and what their responsibilities are to you and your tenants.

As a landlord, you‘ll be responsible for making sure the property is properly maintained. This not only includes the structure of the property, such as making sure the roof is in good order, but also the fixtures and fittings such as basins, sinks and baths.

Your tenants will need contents insurance to protect their possessions, but you’ll need landlord insurance to protect the building itself, as well as any contents belonging to you.

This type of policy should include public liability cover so that if, for example, a tenant claimed against you because they tripped on a bit of loose carpet, your insurance would cover this.