Preparing a Property To-Let
If you’re looking at the buy to let sector and considering investing in property it’s important to be fully aware of your costs in setting up a property to rent out.
As with the purchase of any property the first big costs will be your buy to let mortgage and any stamp duty payable on the property, after this you’ll start to encounter fees which apply specifically to rental properties.
Preparing the property to let
The cost of preparing your property to rent will depend on the condition you purchased it in and whether or not you’re looking at renting the property out furnished. The decision of whether to furnish a property or not will depend on your market: students are likely to require fully furnished properties whereas families or professional sharers are more likely to supply their own.
You may also need to look at redecorating the property and maintaining the garden, at least until a tenant is found. When purchasing a property try and bear in mind that a cheap house with a lot of modernisation required might not be a more cost effective route than purchasing a property in better nick for slightly more. For a first time investment, especially if you don’t have a lot of readily available funds, the latter option may be the better one to consider.
Insurance for your property will also be a vital expense that you will need to factor in, landlord building insurance is a must have and protects your building from any damage. If you rent the property out fully furnished it would also be highly recommended to purchase contents insurance to cover any damage or theft from the property – this won’t cover your tenants possessions though and they should take out their own cover if they wish to be insured. Some landlords chose to take out Rent Guarantee insurance – this will protect you in the event of your tenant failing to pay their rent and some companies can help with legal proceedings in the event of eviction.
Energy Performance Certificate and Gas Safety
It is now a legal requirement to have an Energy Performance Certificate when either selling or renting out a property, as you have recently purchased the property there will be one in place, however if you have any additional work done to your property, for example new loft insulation or double glazing – then it could be worth taking out a new EPC to show improvements. As a landlord you need to make sure you carry out a gas safety inspection every 12 months to ensure the appliances your tenants use are in a safe condition.
Letting agency and marketing fees are another expense to bear in mind, there are a number of options to consider and if you’re willing to handle your own viewings and manage the tenancy personally it may be worth looking at an online letting agency who offer a similar service to a high street agent for a fraction of the price. Once you have found your tenants then the next step is to get them referenced, if you’re new to property investment and using the services of a letting agency they should be able to arrange this for you or point you in the right direction.
An on-going cost will be the general maintenance of the property. The tenant must ensure that the property is kept clean and carry out any small repairs as well as any other responsibilities stipulated in the tenancy agreement. You will need to factor in the upkeep of any the outside of the house including roof, guttering, drains and outside pipes and walls. As a landlord you will need to maintain the equipment providing water, gas, electricity, sanitation and heating (water and space).