How to become a buy-to-let landlord

The property market is widely known as a safe investment which can provide high and convenient profits.

If you are thinking about becoming a buy-to-let landlord, Yeehlow is here to help. Follow our guide to quickly and easily understand more about the topic!

First of all, if you do not have a property ready to be rent out yet, you will need to scan the market and buy a house. Should you not feel familiar enough with the local rental trends it would probably be a good idea to speak with someone who has been living there for a long time — in order to gain some valuable and genuine advice about the pros and cons of the area you are thinking to invest in — and to rely on an agency at least for the searching and viewing stages of the process. Don’t forget to take into account all those little details that can increase the property’s value and appeal: availability of public transports both during the day and at night; distance from gyms, supermarkets and schools, noise levels etc. Potential tenants will for sure look out for these facilities and they can really make the difference when deciding what and where to rent a house.

In addition, check carefully the status of the property: does it need any renewal or fixing work? How much is it going to cost to get it nice and ready to be rented out?

Once you’ve found the perfect property, think about applying for a buy-to-let mortgage. This is different from a normal, residential mortgage since it is specifically designed for properties that will be rented to different tenants. The main distinctive trait is that, when asking for a buy-to-let mortgage, the bank will take into account both your standard income and a percentage of the rental income you will get from letting the property.

A buy-to-let kind of mortgage can either work on a repayment or interest-only basis, the former being the most common option. Furthermore, this kind of loan implicates higher levels of risk and, therefore, the creditor will require a larger deposit.

Once you are all set with legal and financial practices, it’s time to start renting. uSwitch reports that there are two ways of being a landlord: a full-time professional landlord, or a part-time landlord who relies on an agency. In the first scenario you rent the property and deal with tenants directly while, in the second case, you employ an agency which will basically carry out the work for you (while still, of course, owning the property and being responsible for the repayment of the possible mortgage.) Generally, the agency will ask for a 10%-20% fee calculated on the average rent.

You can choose to specialises in different kind of tenancies: long-term, short-term, HMOs or students lettings. We will look into these different kinds of “landlord specialisms” more carefully in another blog post, at Yeehlow.com