Check before you let
The buy-to-let market is buoyant, with buy-to-let mortgages up by over 475% in five years. As falls in share prices dent the confidence in the stock market, many buyers have moved to this more "hands on" type of investment, and most are very happy to have done so. Typically you may get a couple who already have a property each deciding to move in together, and they may decide to rent out one or both of their properties to fund their new start.
Landlord and Tenants
Failure to "cross the t's and dot the I's" at this stage can lead to problems later and as a new television series, entitled, rather worryingly, "Tenants from Hell" shows us, it may not all be plain sailing in your new life as a landlord.
Tales of cannabis farms being set up in a London property, expensive homes being wrecked by a revenge-seeking unhappy tenant or finding you've let a home, lovingly refurbished maybe, to a convicted criminal are featured in the programme.
Buy-to-let and Your Tenants
There are steps that you can take to lessen the risk of nightmare tenants. Two of the most important things are to ensure the tenant signs a contract and pays at least a month's deposit before being given the key. Also, always obtain and follow up, references, including that of their employer. It's also a good idea to check with the employer just how long the tenant has been employed. References from previous landlords are invaluable, try to speak to them personally if possible. It is also possible to use a credit referencing service, at a cost of around £25.
It may be possible to secure a guarantor for the tenant, which would be an excellent move. No matter how pleasant and easy to get on with the prospective tenant appears to be, it's easier at this stage to ask for a copy of their passport and make a note of their national insurance number. If it comes to tracing them later, you'll be glad you took this step.
If you do, unfortunately, find yourself lumbered with a bad tenant, despite all the precautions, the courts are busy and understaffed and you may find yourself waiting five months to obtain a repossession order, which is frustrating and costly.
We heard of a case recently where someone rented out a terraced house with a value of just under £120.000 to a single woman on housing benefit. The first month's rent and a further month's deposit were paid, but no more money was received. By the time the tenant was evicted, the house was in a total mess and in addition to the almost £5,000 rent owed, there was £2,000 needed to redecorate and rubbish removal costs.
To avoid getting into this situation it might be as well to consider employing an agent. They will thoroughly vet any prospective tenants and are experienced in spotting potential problems and acting quickly to minimise the consequences. They are there to protect your interests.
An agent who is registered with the Association of Residential Lettings Agents, otherwise known as ARLA, or the National Association of Estate Agents (NAEA) is a good choice. Both stick to good codes of practice.
So, take care when choosing your tenants. Buy-to-let continues to be a sound investment if you can avoid the, fortunately rare, tenants-from-hell.
For details and quotes on buy-to-let mortgages, search the internet for a broker. You'll then be offered details of what's on offer, but remember to follow all the rules for a good relationship with your tenant.
Read the great articles avaiable at Mortgage Gogetter.
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