How to choose a buy-to-let property
12th August 2024
News
Before starting your property search, it’s essential to consider what to look for in a buy-to-let property and understand how it works so you can approach your investment with confidence.
But what does a “buy-to-let” property mean? A buy-to-let property is a property purchased with the sole intention of renting it to tenants and not to live in—in short, a property to be rented out. It’s a popular way to invest your money, as it means you receive both regular income and capital growth on your investment.
Getting into the rental market means putting yourself in the mindset of your potential tenants, rather than what you’re looking for in a home. Things that appeal to you may not appeal to a prospective tenant; from interior design to location and property type. To understand how to choose a buy-to-let property, it's vital to understand who your target tenant is and how to make your chosen property attractive to them.
Find out everything you need to know about buy-to-let properties, from how they work to their benefits and considerations. We can also help navigate you through the process of selecting the right buy-to-let property for you.
Contents
- How does a buy-to-let-property work?
- What to look for in a buy-to-let-property
- What are the benefits of buying to let?
- What are the considerations investors must consider?
- Ready to become a landlord?
How does a buy-to-let property work?
Becoming a landlord can give you both instant, regular income, and a nice savings pot for the future if the property appreciates in value over time. However, it’s essential to recognise the responsibilities involved.
As a landlord, you’ll need to manage property upkeep, maintenance issues, and financial, legal, and tax obligations. To protect your investment, you must also choose the right landlord insurance to avoid any unwanted costs.
Your tenants will also need to keep up with their rental payments after signing their tenancy agreement with you, in which they must also agree to your contractual obligations. In cases where tenants fail to keep up with the agreed-set payments, having a rent guarantee insurance is an excellent backup to protect you against any loss.
While there are no easy investments, the potential for return on investment on a buy-to-let is huge if you find the perfect property.
What to look for in a buy-to-let property
Here are the main aspects to consider when looking at a buy-to-let property:
Benefits
- Increased rental yields – acquiring rental income
- Potential for Capital Growth – increase in property value
- No Capital Gains Tax (CGT) when a limited company sells a buy-to-let
- Offset the costs against tax with a Buy-To-Let Mortgage
Buying a property to rent has various benefits, including a regular income and potential long-term capital growth when investing in an attractive property with increasing value over time.
Profitability
Maximise your profitability by choosing a rental property in a high-demand area. Research is key, and a great place to start is reaching out to a reputable estate agent for advice. High-demand areas may have good transport links, schools, parks, shops and healthcare facilities either within them or a short distance away. Keep your property’s appeal broad so it is attractive to as many people as possible.
When searching for your buy-to-let investment property, why not consider the value of new or recently built properties? These properties will require less maintenance and will also be fitted with up-to-date appliances and amenities. However, these may also come with a larger price tag, or groundskeeping fees, depending on the location.
However, older homes also offer an abundance of opportunities, as the cost of the property will most likely be less than that of a new home. Whilst there may be more maintenance required on older homes, if you are happy with this as a consideration, they are still great, valuable investment options. It’s always a sign of a good investment when you still have a budget to work with on your property after buying.
Considerations
Maintenance
As a landlord, you must keep up with regular maintenance, so accounting for maintenance costs in advance will be essential to staying on track with your investment.
Here are some common maintenance issues or tasks that sometimes appear:
- External repairs – e.g. roof fixes
- Gas safety check
- Plumbing issues
- Water leaks
- Damp or mould problems
- Toilet issues
- Electric issues
- Boiler not functioning correctly – no hot water
You may also need to invest in a refurbishment or some upkeep work semi-regularly, such as a fresh lick of paint or gardening maintenance. Try to go for a timeless, clean look with your décor which won’t need updating as regularly.
If maintenance is a factor significantly impacting your investment decision, why not consider working with a property management company that will maintain your property for you?
We offer a comprehensive lettings and management package that covers maintenance on your behalf. With Marchand Petit, you can relax in the comfort that we are taking care of letting matters for you by our readily available team.
Budget
Setting a realistic budget is one of the most important things to consider when investing. Additional costs, such as insurance, property management fees, legal expenses, and unexpected repairs, need to be financially prepared for. A buy-to-let investment may require you to create a financial plan to cover these expenses.
How desirable the property is
Desirability to tenants is a massive factor that can “make or break” an investment. Therefore, ensuring your property is attractive to renters is a critical way to support your property.
Here are some factors we found made a property attractive to tenants:
- Modern amenities
- Excellent property condition
- Inviting exterior – good “curb appeal”
- Close to nearby transport links – i.e. bus stops, train stations, airports
- Close proximity to employment – i.e. towns and cities
- Safe neighbourhood
Discover our full guide, where we delve into the most in-demand features in a UK property and learn more about what will make your buy-to-let most desirable.
Location
Choosing a strategic location is by far the best decision you can make for your buy-to-let investment property, as it is a main factor influencing how desirable your property is.
Being near employment opportunities, schools, and public transport are all essential qualities tenants will be searching for already. There may be areas slightly out of town that offer better investment potential for those renting on a budget. Ultimately, location is most important for renters making a final decision.
Property type
Another component of your buy-to-let search is finding the right property type. This may require you to consider who your target tenant is and the scale of maintenance you can afford with your budget. For instance, a smaller property could be best for starting your buy-to-let journey for the first time.
There are pros and cons to each property type, such as rental demand and potential resale value. Consider how much money and time you are willing to invest to determine the type of property you should invest in.
Starting your buy-to-let investment journey
From researching your location and property type to getting a financial plan in place, you can start investing when you have taken the necessary steps to prepare for your new set of landlord responsibilities and have your investment plan set out.
When you are ready to start your buy-to-let investment journey, look into reputable estate agencies in your chosen area to help find your future buy-to-let property. We may even have what you are looking for at Marchand Petit, an estate agency in the South Hams with a winning track record in residential lettings and property management services.
Discover the Most Frequent Questions Asked by Landlords
Become a landlord with Marchand Petit
Become a landlord with Marchand Petit and discover why we’re one of South Hams’s most well-established estate agencies – we’re an independent company with almost thirty years in operation! As a trusted letting agent in South Devon, our property experts are here to help you make informed decisions and achieve your buy-to-let investment goals.
Enjoy peace of mind and your property investment profits, and we’ll take care of the rest.
Contact any of our Marchand Petit branches today for personalised advice and support on your exciting buy-to-let investment journey.
