The mortgage market is difficult right now and it doesn’t look like it’s going to ease up any time soon. But while that makes things tricky for first time buyers, if you’ve got a property – or believe you could afford to buy one – then you might be able to profit from the booming rental property market.
If you think you’re in a position to tap into the increasingly lucrative letting industry then read on for a guide to the ins and outs of the process.
Your options explained
You may be in any one of a few different situations and each will make a big difference to how you go forward in becoming a landlord. Here are the main ones.
- You have a spare room you want to rent out
Becoming a resident landlord might be a pretty attractive policy as under the government’s ‘rent-a-room’ scheme you are permitted to earn £4,250 a year tax free from rental income. However, you need to remember that if you do rent your room out you’ll be taking on a number of responsibilities, such as the safety standards and general condition of the accommodation.
- You buy a property and have a company manage your rental
This option rests on your ability to buy a property that you can rent out. This means you’ll need to go through the entire house hunting process with one eye on your final rental goal. From choosing a location that will help you maximise your rental income to securing the service of a solicitor who offers conveyancing services.
When you have your rental property, and it has been renovated to an appropriate standard you can hand over the day-to-day management to a specialised company. This is the lowest-hassle option as you’ll hand over the administration of the property to the management company. They’ll take care of finding and dealing with tenants, although you’ll still retain liability on many issues and you’ll be charged for their services.
- You buy a property and manage it yourself
This option will potentially bring you the greatest financial rewards as you don’t have to hand over any of your rental income to a management firm – although you will have to do all those administration tasks yourself. This can make the option quite time intensive but a bit of effort on your part can limit this. The most important thing can be finding good tenants so interview potential candidates and making sure you get valid references. Also, spend a bit of time understanding your legal obligations as landlord, and ensure that you are always fulfilling your role to the full – a little bit of groundwork can save you a lot of trouble in the future.
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