Rising interest rates (albeit cushioned to an extent by climbing rents) are clearly a concern for many buy-to-let landlords, but you can still make the market work for you. According to the Property Reporter website: “Investors can take comfort in the fact that the situation appears to be stabilising”. And the general consensus is that buy-to-let remains a viable investment.
However, the current situation does mean having a good lettings agent is more important than ever. So if you’re looking to make your first purchase in this sector, it’s particularly important that you ask your agent all the right questions before you do anything else. Here, we supply a checklist of things to clarify.
- Has the property been let out before and was there a strong demand for it?
It’s always worth getting a feel for the kind of tenant the property’s area attracts.
Your agent should be able to inform you about average tenancy duration and void periods for the property. This will help you to assess risk of the place standing empty, which would obviously affect the return on your investment, while also giving you a feel for how quickly the property could be let out.
The flat or house’s rental history can be a good indication of stability of rental income. It’s also worth asking to see a copy of the current tenancy and deposit protection.
- Is it leasehold or freehold?
This will affect the best strategy for letting out the property. For leasehold places, you will have to take into account service charges and ground rents and assess the potential impact of these on your rental yield. The length of the lease can also affect your long-term plans for the flat or house.
- Is it in a desirable location?
If the area is sought-after, it will be more likely to draw in the kind of long-stay tenants you want, attract a higher rent and stay competitive. Ask about local transport links, shops and schools, and pick an area suiting your target demographic. For example, if you’re marketing the property to students, ask about bus and train hubs and similar amenities, as well as distance to the campus and maybe local nightlife, too.
- What sort of rent is the place likely to attract?
This is always a key question to put directly to the agent, no matter what research you have already done yourself. Ask them how they have come to the figure they give you. Any letting agent worth their salt will have a good understanding of the local rental market, plus the history of the property you’re considering.
This not only gives you confidence in your agent, but can also be a big help in reaching an informed decision.
- How easy is the place to maintain?
Expensive maintenance issues can be a time-consuming hassle as well as affecting your return on investment. Before you commit, assess the probability of the property needing ongoing work. The agent’s response will depend on the property’s repairs history, its age and on how structurally sound it is.
- How is its energy efficiency?
An Energy Performance Certificate or EPC indicates a property’s energy efficiency. It includes estimated energy costs, while summarising a property’s performance-related features.
Each property receives a grade, between A and G, with A having the greatest energy efficiency and G-rated places having the least.
Currently, the minimum EPC rating for any home being let out is E. However, by 2025 that will change to a C. Tenants are increasingly keen to know about these matters, as environmental concerns and rising energy costs continue to make headlines. Energy-efficient homes have become more desirable than ever.
So if the certificate on the property you have your eye on is below a C, ask what steps will be taken to improve this.
Oakfield says
We fully appreciate that all the above points really matter, and these issues are ones we always answer or volunteer information on when showing prospective buy-to-let landlords round properties we’re letting out.
At the same time, we fully appreciate the current market challenges, while feeling confident that buying to rent out remains still a worthwhile investment.
Finally, at the same time it’s always worth asking yourself what matters most to you, and what your priority is. Is it rental yield, avoiding hassle or eliminating void periods, capital growth or ease of letting, now or in the future? Is your investment a long-term one?
For example, while a five-bed home could seem an attractive proposition, you may not want to have to find five sharers regularly, or have to deal with the resulting wear and tear on the property.
At Oakfield, we have offices across Bexhill-on-Sea, Hastings and Eastbourne. Landlords in East Sussex have trusted us for more than quarter of a century to let out their properties. We could help you, too. Get in touch today and we’ll gladly answer any questions you may have about renting out a place in our area. Find our contact details here.