A BUY TO LET CHECKLIST

by Nicholas Newman Editor Oxford Prospect Magazine

12 November 2006

CONSIDER THE RISKS_  CHECK_YOUR_CASH_FLOW_ 

CARRY_OUT_ADEQUATE_MARKET SURVEY ADD UP YOUR FEES  PICKING_AN_AGENT TENANTS Meeting Tenants’_Epectations   Targeting_Your_Tenant   Suggested_Reading For_Further_Advice  Your_legal_requirements

What you need to do to ensure that you make the most of your buy to let property investment.

 1.     CONSIDER THE RISKS

A.   House prices can fluctuate and rents may fall.

B.    Interest rates may increase, making it harder for your rental income to cover your mortgage payments and other costs incurred with the property.

C.   You may have periods when you will not be able to find a tenant. This is a common occurrence in university towns when students depart for their holidays.

2.     CHECK YOUR CASH FLOW

                                                              i.      Remember to factor into your calculations the cost of purchasing, managing and letting your investment.

                                                            ii.      It is important to set up a contingency fund to cover emergency repairs and regular maintenance.

3.     IT IS VITAL YOU CARRY OUT ADEQUATE MARKET RESEARCH

A.   You need to investigate the property, its location, tenant demand and typical rents in the neighbourhood of your investment

B.    Go as a mystery shopper; get taken round by a letting agent to see what is on offer. This will give you a feel for the competition. It will give you an indication of what facilities and standards potential tenants will demand for the rent you have in mind to offer.

C.   Do not buy on sentiment or according to your own personal taste. Unless your potential tenant is a cordon bleu cook, a large luxury kitchen is wasted on most people. A majority of tenants wants a good living room to watch television, study, socialise and eat their microwaved meals.

D.   Check with the council and the local media about things that may affect demand for your property. News of the opening of a new hospital or the closure of a car factory can have a significant impact on demand for your property.

4.     ADD UP YOUR FEES

Take into account all your costs including:

5.     PICKING AN AGENT

A.   Asking around will give you a good idea of which agent has the best reputation

B.    It is advisable if the agent you choose belongs to one of the following trade bodies:

                                                              i.      ARLA (Association of Renting Letting Agents) http://www.arla.co.uk

                                                            ii.       National Approved Letting Scheme (NALS) http://www.nalscheme.co.uk

         Its members offer a complaints procedure and offer arbitration for unresolved disputes.

C.   Even if you use a letting agent, you are responsible as the landlord for ensuring that you comply with current legislation, including for example, gas safety regulations. A suggested website for keeping up to date with current legislation is https://www.landlordlaw.co.uk or buying the ‘Which Essential Guide to Renting and Letting.’ See section 8 below.

6.     TENANTS

A.   Treat your tenant as a customer and make sure you meet their needs.

B.    Make sure you keep copies of all documents concerning your investment including the tenancy agreement safe. You will find it very useful as evidence in any legal dispute with the tenant.

C.   Tenants need to provide passport details, National Insurance number, and a credit history with a credit reference agency and employers reference.

D.   You can buy standard tenancy agreements from any good bookshop

E.    New housing legislation regarding the introduction of a licensing scheme for some houses in multiple occupations (see www.communities.gov.uk to check if your property is affected). or Your_legal_requirements

1. What you need to do to meet tenants’ expectations

2. Apart from making sure that all the wiring is safe and in good condition, together with your boiler and radiators, you need to consider the décor of the property you intend letting out.
3. Targeting your Tenant
4. The starting point is always your target tenant.
   If you are planning on letting the place out to students the quality of the décor and any furnishings need to be of a slightly less ambitious standard than if you are renting to US executives who bring their families over while working in the UK.
5. 
   In the former case, a good washing machine in a fairly standard but clean kitchen is all you need to bother with, along with appliances that work.
   In the latter case, you will need to consider a professionally-fitted top of the line kitchen with matching crockery, en-suite bathrooms and a range of other mod cons.

Your furnishings will need to reflect the tenants you are seeking
In-between are the various other tenant types and you should work out:
a) what you need to provide to meet their likely needs
b) the cheapest way of doing this without compromising the effect you are trying to achieve

8. Suggested Reading –

Click here to buy  the books you need

A.   Which, 2006, Renting and Letting. Essential Guides Price £9.99 

B.    Ahuja, 2006 The Buy to Let Bible. Lawpack Publishing Price £11.99

C.   Furnished House or Flat Rental Agreement Assured Shorthold Tenancy for England and Wales/     Latest government housing legislation see www.communities.gov.uk

9. For Further Help

Send Email: #  with questions or comments about this web site.
Copyright © 2008 Oxford Prospect Magazine
Last modified: 07/06/08