Each month, partner and property expert, Graham Ireland discusses your conveyancing and residential property queries. Here he explains the pitfalls amateur landlords could face if they aren’t fully aware of the law regarding buy-to-let properties.
Question: I am thinking of buying a property to let to tenants. What are the pitfalls?
Current estimates are that 10,000 people every month become amateur landlords with an extra 120,000 investors buying buy to let properties last year. Further, national statistics show that taking out a buy to let mortgage has never been cheaper because of a price war amongst lenders. The statistics also show that one in three people heading for retirement are considering purchasing a buy to let property and there is no doubt that this type of property has been a very profitable investment since the first buy to let mortgages were launched almost 20 years ago.
However, there has been a considerable amount of legislation that has been introduced in recent years and anyone who is looking to purchase a property with a view to letting it to tenants must have a reasonable idea of the current legislation.
There are rules currently in force relating to accepting deposits from tenants, gas, electrical and safety legislation and a whole raft of other rules in this area.
I would never advise anyone to purchase a buy to let property where they need the rent to be paid by the tenant in order to be able to pay their mortgage instalments. If you are unfortunate enough to end up with a bad tenant, it can cost you thousands of pounds both in lost rental income and in damage to the property and if you do end up with a bad tenant, you cannot simply change the locks or forcibly remove them from the property.
If you are obtaining mortgage finance to buy such a property, ensure that you are able to meet the mortgage instalments without needing to rely on the rental income.
You will also need to factor in such things as ongoing repair bills for the property and vetting the tenants so before you go ahead and buy make sure that you do your research carefully and try to invest for long, rather than short term.