7 Tips for Buy-To-Let Investors

Embarking on the journey of buy-to-let investing can be both exciting and extremely rewarding, offering the potential for high returns and long-term financial security.

That said, navigating the complex world of property investment is no small feat, and requires careful planning, strategic decision-making, and a deep understanding of the current market dynamics. This is why equipping yourself with the right knowledge and expertise is essential for success. 

In this blog, we’ll explore six invaluable tips to help buy-to-let investors make informed decisions, maximise returns, and mitigate risks in today’s dynamic real estate landscape. 

From choosing the right buy-to-let conveyancing solicitor to finding the right location and staying informed about regulations, these tips will help investors to navigate the buy-to-let market with confidence.

But before we get into these tips, what actually is a buy-to-let property? And is it a good investment?

What Is a Buy-To-Let Property?

To put it simply, a buy-to-let property is an investment strategy whereby an individual or group of individuals purchase a property with the intention of renting it out to tenants, rather than living in it themselves. 

The goal of a buy-to-let property is typically to generate income and hopefully benefit from property appreciation over time.  Typically speaking, buy-to-let landlords receive rental payments on a monthly basis, and with the ‘average rent in the UK now at £1,260, up 7.5% on the same time last year’, you can see just how much money could be earnt as a landlord.

Discover more reasons why buy-to-let properties are a good investment here. 

Tips for Buy To Let Investors

Here are 7 top tips for buy-to-let investors:

1. Understand exactly what a buy-to-let property involves
2. Choose reliable buy-to-let conveyancers 
3. Find the right location
4. Calculate potential returns
5. Stay informed about regulations
6. Know your tenant 
7. Screen tenants 

1. Understand Exactly What A Buy-To-Let Property Involves

The first tip we can give to potential landlords looking for a smooth buy-to-let experience is to do as much research as you can so that you know what a buy-to-let property really involves. 

It’s important to remember that you’re investing both time and money into a buy-to-let property, and being aware of any potential pitfalls is crucial to ensure you are properly prepared. 

Do also take into account that being a buy-to-let landlord means you’ll have specific legal obligations, and failing to comply with these could mean you commit a criminal offence. 

Also, if you need a mortgage to purchase the property, you will need a special buy-to-let mortgage, which is different to a normal residential mortgage as it comes with its own rates, rules and interest rates. 

2. Choose Reliable Buy-To-Let Conveyancers

Whether you’re a first time landlord or planning to expand your property portfolio, buy-to-lets are classed as investment properties, meaning you will need a solicitor to ensure that the transaction is conducted smoothly, legally, and in your best interests as an investor.

How to Choose a Buy-To-Let Solicitor

There are several things you should consider when choosing the right buy-to-let solicitor, for example:

• Ask for recommendations – One of the best ways to gain insights into a firm is to ask friends, family, colleagues or neighbours for recommendations. They’ll be able to offer their opinions and detail their positive or negative experiences with certain solicitors. 

• Read testimonials – Reviews are another fantastic way to find out about a solicitor or particular law firm and gauge whether they’re the right choice. Google reviews are a great place to start. Most credible solicitors should also have client testimonials on their website, which, if positive, indicate they offer a high-quality service you can trust. 

• Check years of experience – Many years of experience is another great indicator when looking for a reliable solicitor to instruct. Our buy-to-let solicitors here at Harding Evans have years of experience in handling these types of cases.
  
  We also have in-depth experience of working with specialist buy-to-let mortgage lenders and bridging loans and also deal with many Company purchases, so are familiar with the complexities of acting for a Company client.

• Book a consultation – While it’s essential that you do your own research to narrow down your solicitor search, booking a consultation is essential to ensure that you’re comfortable moving forward with the firm and solicitor in question. 

At Harding Evans, our solicitors are well-versed in the intricacies of buy-to-let conveyancing and can handle every aspect of your property transaction on your behalf. Discover how our specialist solicitors can assist you throughout the entire buy-to-let conveyancing process here.

If you are looking for conveyancing services on a buy-to-let property, please contact us by email, or call either our Newport office on 01633235145, or our Cardiff office on 02922676819.

3. Find the Right Location

A big part of your research must include looking for the best areas to rent out properties. 

Many buy-to-let landlords decide to invest in a second property in the same area they are currently living in, believing that being on hand will make managing the property a lot smoother.

And while, indeed, this might be the case if you plan to rent out a property without an estate agent to manage your rental property, for many, it doesn’t really matter how close you are to the rental property. 

In fact, you can probably get a far better yield by looking nationally at the UK as a whole and choosing to purchase a buy-to-let property in a more superior location. These locations include student areas, inner city locations where rental demand is strong, or properties in commuter areas to major cities. 

As we just touched on, if you have decided not to use a management agency, you will have to be available on-hand to your tenants if something goes wrong. In this case, it might be better to choose a location that you can easily access.

4. Calculate Potential Returns

Before purchasing a property, calculate the potential returns on your investment, including your rental income and expenses. 

There are several costs and expenses associated with being a landlord, such as mortgage payments, taxes, insurance, maintenance costs, and management fees, so you need to make sure the rental income covers all expenses and provides a reasonable return on investment. 

You also need to consider that you might not always receive regular monthly rental income. For example, it could be that your tenant might not pay on time. In this case, you must follow a procedure and incur expenses to recover what’s due (it’s against the law to pester /harass a tenant) or there may be a period of time when the property is empty (between tenants).

It’s also important you understand the tax implications of a buy-to-let property. You will usually have to pay tax on income earned from renting and if the total property value is over £40,000, you are required to pay Stamp Duty.

5. Stay Informed About Regulations

Another really important tip for buy-to-let landlords is to stay informed about landlord and tenant laws in your area, including regulations around rental agreements, safety standards, tenant rights and eviction procedures. It’s also important to know how to resolve landlord and tenant disputes correctly and professionally. 

Here at Harding Evans, we are aware of how problematic it can be to deal with ongoing tenancy issues. If you’re ever in a dispute with a tenant or if you’re looking for a legal professional’s guidance, our experienced tenancy dispute solicitor are here to help.

In addition to regulations and how to deal with any potential disputes, it’s a good idea to keep a close eye on market trends, interest rates, and economic indicators that could affect property values and rental demand.

6. Know Your Tenant

Our last tip for buy-to-let investors is to get to know your tenant. What do we mean by this? Well, just as any business must understand its target market, you must identify your own prospective tenants so that you can ensure your property is right for them. 

For example, the needs of a large family will be different to the needs of 7 university students, from how much rent they will pay to what fixtures they will expect you to provide, and so on. 

This leads us nicely into our 7th point…

7. Screen Your Tenants

On the topic of tenants, we also highly recommend that you screen the tenants thoroughly before going ahead with the rental agreement. 

By conducting background checks, verifying their income, and checking references, you are minimising any potential risks of late payments, damage to the property, or any other issues that may arise if hiring the wrong person/ people. 

How We Can Help

If you’re ready to start your journey as a buy-to-let landlord or simply want to expand your portfolio, Harding Evans can help.

Our team of specialist buy-to-let conveyancing solicitors are here to take you through the next steps, no matter where you are in your landlord journey. Get in touch with a member of our friendly team today.