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Location(s)
Research the area you're interested in to make sure there's demand for rented property. Speak to local letting agents about average rents and the amenities and features that will attract your target tenant.
Once you've selected the property, remember that it needs to be presented to a standard expected by that tenant.
Property safety
As a landlord you'll have a number of legal responsibilities, including:
The safety of gas and electrical appliances
Any furniture and furnishings must meet fire regulations
Installation of smoke alarms if your property was built after June 1992
Maintaining the property in a good state of repair
Tenancy agreements
Make sure you have an appropriate tenancy agreement/lease in place, and that it's signed in advance of a tenant moving in. This will clearly set out your responsibilities and those of your tenant.
Management
Think through the practicalities of managing your property. Consider employing a letting agency to find tenants, collect rent and deal with routine problems. Agencies typically charge 8-15% of the gross rental income.
Budgeting
When you've found the right property, work through the figures to make sure the project looks profitable.
In addition to your mortgage repayments, factor in the other costs like solicitors' fees, stamp duty, letting agency fees, landlord insurance, life cover, any furniture/furnishings, service charge and ground rent if the property is leasehold, together with the periodic costs of ongoing maintenance and repairs.
Remember to plan for potential interest rates rises and for periods when the property may be empty.
Insurance
Get yourself covered. There are many different types of policy available covering not just buildings and contents but the additional risks associated with letting a property, such as emergency repair assistance, landlord's liability and rental guarantee.
Make sure your tenants understand that they are responsible for insuring their own possessions.
Taxing times
There are several kinds of tax you may be liable to pay when you own a Buy to Let property. It's worth taking expert advice to see how you can limit your liability.
Income Tax: Inform HM Customs & Revenue of your rental income. If your total income for the tax year is greater than your personal tax allowance, you may have to pay tax. You can offset allowable deductions such as your buy to let mortgage interest payments against your rental income.
Capital Gains Tax (CGT): When you sell the property, you may have to pay CGT on the profit.
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Any property used as security, which may include your home, may be repossessed if you do not keep up repayments on your mortgage.
