renting your property

Letting Your Property – What to Consider

Buying an investment property is very different to buying a home you will live in yourself, and so your approach should be very different too. Whereas buying the home of your dreams can be a personal, almost emotional process, you should go into a buy-to-let investment with your business head screwed firmly on. Take the following points below into consideration to help you on your way to a successful foray into property letting. 

Location, location, location

Try to seek out the local areas most populated by renters, for example near colleges or universities or areas with plenty of employment opportunities. We can offer advice on the best locations in Glasgow to purchase a rental property and the rental income you can expect to achieve. We’ll talk you through the areas that are popular with renters and why, helping you to choose the right property in that area with a target tenant in mind.

Finding the right property

We can also help you identify any gaps in the market; a type of rental property that is in short supply and in high demand, making it more likely to let out quickly. It could be that rental family homes are in demand or student accommodation is the safest option – this will help you decide on number of bedrooms and the type of finish your property needs. Keep an eye on any housing developments in the area which might lead to a flood of new rental options on the market, making your investment potentially harder to fill.

Shop around for mortgages

Shop around for the best buy-to-let mortgage deals out there by doing research online and approaching a variety of providers. By talking to an independent mortgage brokers you will find the best deal out there for you from lenders that you may not even be aware of. Remember, lenders typically ask for a deposit of at least 25% and insist that the rental income is 125% of the monthly mortgage payment.

Calculate potential rental yield

The stamp duty (LBTT) surcharge on second homes which came into effect in 2016 will affect your finances and investment, so, first off, work out what your tax liabilities will be. Then do some more sums to calculate your rental yield – how much your investment is making you, usually calculated in terms of annual figures. For example, if a property costs £80,000 and the annual rental income is £8,000, the gross yield is 10%. However, keep in mind costs you will incur as a landlord during the year, including repairs to the property and licenses/legal requirements, also deducting these. Again a financial advisor can really help you get to grips with the figures.

Be aware of financial variables

Property values go up and down, so researching the area you are looking to invest and the trends of recent years will help you make a more informed decision. Similarly, there will be times between tenants when your property may sit empty without paying tenants, so that will also affect your annual yield. 

Remember your legal requirements

You need to take care of all the practical, legal requirements before letting out a property such as supplying an up-to-date Energy Performance Certificate and gas and electricity safety certificates. Furniture must comply with fire safety regulations and it’s good practice to fit smoke and Co2 detectors too. Landlords in Scotland will also need to register with their local council as a legal requirement.

Work with a letting agent

Working with a reputable and experienced letting agent in the area you are looking to invest will help from the get-go. You could develop a great working relationship that could see you through all stages of the process, from finding the right property, marketing your property in order to find the right tenants to the management of the rental property in the longer-term. Online agents can look costs-effective, but remember they may not have that all-important local knowledge or presence. Letting agents often offer various levels of service, from tenant finding services only, to tenant finding and rent collection, to full management where the property owner is contacted only in specific circumstances. Decide how much time you have to manage your property versus estate agent fees and overall investment yield and talk to us about how we can make the process easier.

Register tenant deposits

It’s legally required for landlords to register all tenant deposits with one of the government recognised deposit schemes. It is held with this scheme until the end of the tenancy, where any money for repairs, cleaning etc will be deducted that falls outside of normal wear and tear. We can help with this and offer advice on how the deposit requirements work.

Create an inventory

To help with any potential disputes with tenants, it makes sense to create a list of all furniture and household items that come with the property when renting it out. This way if things go missing or are damaged, you have a list to back you up. We will help to draw this up along with the letting terms of agreement.

Check your insurance

Standard buildings and contents insurances do not usually cover rental property so check to see if you will need to arrange specific policies to make sure you are adequately covered in the worst case scenarios.

Declare your income

You must register as a landlord with HMRC and declare your annual income via self-assessment each year. Keep detailed accounts, as some costs such as interest on buy-to-let mortgages can be subtracted as expenses against your annual yield, helping save on tax payments. 

Talk to us at Vanilla Square if you are an existing landlord or wanting to venture into the world of property letting!

Vanilla Square – highly personal sales and lettings! Whether selling or letting property, you will always be liaising with one of our business partners, which makes our service that much more responsible and approachable. When you instruct us, your property will reach a wider audience as we are one of the few agents who are present on all the major property portals to offer sellers and landlords maximum exposure. If you’re looking to buy, sell, rent or lease your property, or you’re simply considering the idea, contact us by calling 0141 229 0210 or pop into our new office at 711 Great Western Road. One of our partners will be delighted to help and provide you with impartial, expert advice.