A Quick Buy to Let Property Guide for Beginner Landlords in Leicester
If you want to become a landlord, there are a lot of things to consider and understand before you purchase a property.
It’s good to know what to expect when buying a buy-to-let property, the process of buying differs compared to buying a residential property.
It is a long-term investment that shouldn’t be hurried, so if you are reading this, you are probably looking for the right information.
Our team at Keywest are experts in buy-to-let advice, so here is our straight forward buy to let property guide for upcoming landlords in Leicester.
What is buy-to-let?
Buy-to-let is a property that is purchased with the intention of renting it out. If the rent is higher than the monthly buy-to-let mortgage payments, it can be an investment property that can produce a monthly income.
A buy-to-let mortgage is different to a residential mortgage in that you have to apply for one if you can’t afford it to purchase the home outright.
When applying for a standard mortgage, your income is taken into account, unlike with a buy-to-let loan, the lender considers the potential rental income as your primary source of income.
Even though the interest rates are lower, they have larger upfront fees. Deposits on buy-to-let mortgages are larger than the deposit needed for a standard mortgage, so expect to put down at least 25% more than you would normally do.
What Kind of Buy-to-let Property Should You Buy?
The location of the property, as well as the neighbourhood and the demand in the area, are some of the factors that can be taken into account when choosing the right property.
It is important to conduct adequate research into the area you want your buy-to-let property to be located in.
If you want to target a particular type of tenant, you should include that in your research.
If you want to rent to families, you should look for a property in the suburbs near good schools.
A property near a university is a must if you want to rent to students.
You should keep in mind that your mortgage can be affected by the type of tenants you have renting from you. For example, many mortgage providers have restrictions on student rentals.
Do you Need Buy-to-Let Insurance?
It is possible for a landlord to legally manage their rental property without buy to let insurance. However, depending on your mortgage provider and the terms of the mortgage may mean you are required to pay for buy-to-let insurance (also known as landlord insurance). This will give you coverage for the building and the contents inside, as well as any landlord liability.
Your mortgage lender may require you to have building insurance in order to secure a loan. This will cover the costs of repairing or rebuilding, so you don’t have to pay a lot of money out of pocket.
Any furniture in the property will be covered by content insurance. Even if your buy-to-let property is unfurnished, it is a good idea to get contents insurance because you can choose what level of cover you require, and it can protect any curtains, carpets, and other furnishings that come with your property between tenants.
Tenants who rent unfurnished will be responsible for their own contents insurance when they move into the property.
Landlord liability is mostly your choice, but if you’re renting to students, for example, there may be a minimum level required. Any deaths or injuries of tenants or visitors in your property are covered by this.
Do you Need to Use a Letting Agent?
The answer depends on the budget and level of involvement you want to have with your new BTL property.
If you want to be a very hands-on landlord, you may not want to go through a letting agent.
If you would rather take a more hands-off approach, then using a professional, experienced letting’s agency will help maintain the upkeep of the property.
Letting agents like us will help you carry out credit checks on your potential tenants, help you come up with a letting contracts, chase late rental payments for you, help with any maintenance on site that needs to be done, and assist with mandatory safety and efficiency checks for gas and energy.
The fees to work with a letting agent typically include paying an ongoing fee to manage the property. These fees can vary, so to get a complete idea of costs, it is best to speak with your agent.
If you are a new landlord, using the services of a letting agent can take a lot of the burden off of you.
For professional advice on purchasing a buy-to-let property in Leicester, contact our expert team at Keywest on 01162544555 or email firstname.lastname@example.org.