There is scarcely a day goes by without a national newspaper reporting the sad demise of the BTL Landlord. You would think that sighting a confident/successful Landlord in Harrogate would be rarer than spotting a White Rhino on the Stray.
The truth is the exact opposite.
The Rental Market is in good shape in the town and demand & rents are strong with a shortage of good quality properties in certain parts of the market – for example 3 Bed Semis and 4 /5 Bed detached family homes on the south side. What is true however is that the age of the amateur Landlord is over and the age of the property business owner has arrived.
Given it’s a serious business nowadays I will try and list some of the common mistakes that new/inexperienced BTL landlords can make – and I hope you will forgive me for saying not working with a really good Letting Agent is one of the biggest ones (I recommend Myrings!).
Set against the above cautions is the safety net of a remarkably robust property market in Harrogate with a steady increase in property values year on year.
Here we go.
Don’t spend too much for too little return.
Buy well and calculate what you can afford taking into account the sizable expenses of being a landlord. Don’t overstretch yourself , be realistic about your finances/likely rent and be sure to take out the best possible mortgage if funding from lenders is required. Please bear in mind that over the next few years further interest rate rises are almost inevitable.
Don’t forget to ‘futureproof’ your investment.
Before you buy do the local research and you might discover why a certain property seems a bargain. Is the location in an upcoming area or becoming less desirable? – is a Supermarket planned for the end of the road? At all times you must closely consider the property and the profile/needs of the target tenants calculated to give the best rents/yields.
Please note – unfortunately there are a significant number of risks that come with owning a rental property, from damage by tenants to fire or flooding. Whilst it’s easy to budget for insurance, either annually or per month, it’s a lot harder to predict whether or not your property will suffer serious damage, or how much that will cost in lost earnings/reputational damage as well as repairs. Having a comprehensive, tailored landlord insurance policy in place can protect you against such risks, and spending money from the start on a good policy can save you money and sleepless nights in the long run.
Buy for your tenants, not yourself
Buy a property that will generate a good reliable/predictable return. The foundations for a success are laid in the shrewd buy (here your best friend is a great Letting Agent who will stop you making an unwise investment and point you in the direction of better buys). Don’t fall into that all-too-common trap and buy a place you like but which is entirely unsuitable for the tenants you have in mind. Be sure to approach the decoration and fitting out of your property in the same way.
Don’t forget the taxman. (He won’t forget you)
Just as not instructing a good Letting Agent to screen your tenants and collect the rent is a bad idea I would say that DIY dentistry is similarly not to be recommended as is not paying for a professional accountant to handle your business affairs. Recent new legislation means that there are increased SDLT (Stamp Duty) considerations as well as the more onerous taxation of Rental income but there are of course tax reliefs on certain expenses you incur as a landlord.
Do you understand the role of a landlord?
Sometimes landlords fail to appreciate and understand the legal frameworks that surround every landlord. Firstly, whilst it may be your property, it isn’t your home. Let your Letting Agent handle everything connected with the tenants, all the laws and regulations and the management of the property. Trust the Agent to deal with the tenants if the pilot light on the boiler blows out – but more importantly to have new tenants ready to move in as others move out.
Prevention is always cheaper than the cure
Don’t wait for a 2am phone call from the tenants – a good property management will save you time and money and anticipate/manage problems. Make sure you’re ahead of the game when it comes to boiler servicing, electrical safety and general repairs. One of the most expensive things for any landlord is an empty property or loss of rent. Make sure your property is maintained in good order throughout the tenancies and accommodate new tenants with minimal void periods.
Summary
Our advice to a new / inexperienced BTL Landlord is – instruct and work closely with a good local Letting Agent – and avoid making avoidable mistakes – and continue to bear in mind – Harrogate is a great place to invest in terms of yield & capital growth.
If you wish to discuss the above or are interested in the Property market in Harrogate then please come along and see us and enjoy a free no obligation chat about the property services we provide.
Charles.
