At first glance it might appear that 2024 might not be the best year to become a private landlord. Interest rates remain high, the cost of living is still an issue and what about all those new rules and regulations?
But there is another way to look at it.
2023 saw average rents increase by 6.1% according to the Office for National Statistics – that was after a 4.2% rise in 2022. That means rents have gone up by over 10% in 2 years and most commentators are predicting a further increase in 2024.
And interest rates may be high in comparison to 2021 but they are heading downwards and, turning to those industry commentators again, most are predicting that the base rate will begin to fall again come the summer.
Looking at the longer term, the shortage of suitable homes means demand will remain extremely buoyant.
And if you’re thinking about a property investment right now, remember, it’s still a buyers’ market – despite the New Year bump – and savvy purchasers may still be able to grab a bargain.
So if you’re a ‘glass half full’ sort of individual and you decide to take plunge, here are a few tips that might help as you set off on your landlord journey for the first time.
1. Do your homework
Before investing in a rental property, check out the property portals to find out how much rent you are likely to generate in that area. And think carefully about your approach. Will it be furnished or unfurnished? Will you allow pets? Who is likely to rent the property? Is it near a school? Perhaps you should think about families. Is it close to a university with lots of local amenities like bars and cafes? Maybe it’s more suited to student tenants. Before investing in a property, always think of the marketplace – who would want to live there?
2. Do you need help?
Even at this early stage, it would be wise to think carefully about what happens after you have secured your first tenant.
You will need to select a suitable tenant and carry out right to rent checks, affordability checks, employment checks. Good letting agents can help with all of this because they will have the necessary systems in place to be able to offer a referencing service.
Do you intend to manage the property yourself or hand it over to a lettings agent? If you intend to let only one property, you may be tempted to think you can go it alone. Perhaps you can but there’s a lot more to being a landlord than collecting the rent. But if want to build a portfolio and run a buy to let business, it’s more likely that you need to seek the help of an experienced lettings agent to manage your property leaving you free to concentrate on your next business opportunity.
3. Put less energy into it
Even before a property can be rented out, you will need to give your tenant a copy of the Energy Performance Certificate (EPC). If the property has a lower rating than ‘C’ – it would be wise to find out if rating can be easily improved by undertaking insulation measures or switching the lighting to LED. With their bank balances and the future of the planet in mind, more and more tenants are looking for properties that use energy more efficiently – undertaking the work while the property is still empty will make life much easier.
4. Place the deposit in one of the official schemes
All tenancy deposits must be protected under the Housing Act, 2004 within 14 days of receipt by the landlord. You can find out more about these schemes, here.
5. Get under cover
You will need specialist landlord insurance for buildings and contents and there are other services available for property owners in the PRS like rent guarantee schemes which you might like to think about.
6. Take tax advice
The taxation rules for landlords are complex and it is worth taking advice from an accountant before letting your property so you are fully aware of what you can and cannot claim. Additionally, different rules apply depending on whether you are a sole trader or a limited company.
7. Finally, safety first
It is a legal requirement that all privately rented homes have gas safe checks on all relevant appliances every year; smoke alarms should be fitted on every floor and, if solid fuel is used, carbon monoxide detectors must be installed in the room. Also, there needs to be an electrical installation inspection every five years undertaken by a qualified electrician.
Good luck on your landlord journey.
At PH Estate Agents, we specialise in properties across Cleveland and North Yorkshire, our heritage comes from traditional estate agency values, based on trust and exceptional customer service.
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