Should I become a landlord?

Increasing numbers of people are looking to the buy-to-let market as a means of earning additional income. Demand for rental property is at an all-time high and the Office of National Statistics has estimated the UK residential property market to be worth over £5 trillion. But the landlord route is not for everyone.

Here are some questions to ask yourself before investing:

  • Is this really what I want to do?

    It might sound obvious, but property investment is not necessarily everyone’s cup of tea. Before you jump straight in, make sure you know what you’re getting yourself into. The going will not be easy and successful property investors are adept at taking a long-term view, riding out short-term storms and staying patient.

    Taking the time to decide whether it’s for you could save time and money on property maintenance and the other costs associated with managing a tenancy. 

  • Can I afford it?

    Perhaps the biggest hurdle to overcome is the cost of acquiring and maintaining a rental property. For starters, most buy-to-let lenders demand at least a 25% deposit for rates which are higher than residential mortgage deals.

    Even once you’ve acquired a property, there are a number of smaller costs which may appear on your radar. Arranging an Energy Performance Certificate, a Gas Safety Certificate, as well as undertaking remedial works to get a property up to the appropriate standard means these costs can soon build up.

    Another factor to consider is whether you will be able to meet your mortgage repayments if a tenant stops paying rent. Even the best tenants can find their circumstances changing, which can make it difficult for them to meet their rental commitments.  Having a rent guarantee policy in place can protect you from being out of pocket as a landlord. For more information on dealing with rent arrears, take a look at our top tips.
     
  • Am I organised and flexible?

    If you invest in property, expect to be flooded with paperwork and administration. This can be overwhelming unless you have an organised filing system and can diligently maintain up-to-date buy-to-let records. This will help you keep on top of all the administrative demands of being a landlord, such as protecting a tenant’s deposit.

    As a landlord, you will also need to be adaptable and flexible. No two tenants are alike and they may have different expectations of you as a landlord. What’s more, there will be occasional mishaps and breakages within the property which will require your swift attention.
     
  • Where do I draw the line?

    Finally, it’s important to remember that successful property investors treat their portfolio as a business. Managing a rental property could take over your life if you allow it to, so it’s crucial to know where to draw the line. One way of doing this would be to employ a letting agent to manage the property for you. Whilst there’s a cost associated with this method, it can help to minimise the stress of buy-to-let investment. 

Read  our disclaimer

Endsleigh

Endsleigh specialises in providing insurance for students & professionals; covering gadget, car, home, travel & life insurance. 

Related articles

What is the deposits and tenancy deposit schemes

In England and Wales, landlords are obliged to place any deposit they receive (up to the value of £100,000 a year) in to a Government-authorised tenancy deposit scheme.