Buy To Let Mortgages UK
Buy to let is one of the biggest markets in the UK; it is also one of the fastest growing areas of investment...
Absolutely fundamental to any buy to let investor is the tenant; without tenants, the buy to let investor will have no income and the investment fails. Similarly, having poor tenants can mean that they do not pay their rent and worse still it means that you are unable to find alternative, paying tenants.
Choosing Your Tenant
Depending on the type of tenant you are trying to attract (which will be largely decided by the type of property that you own), you will have multiple different sources of finding suitable tenants. For a standard professional let, make sure that you advertise appropriately, in professional publications. Another good idea is to advertise to large companies that may have an ongoing demand for good quality accommodation. Although these companies may not offer the same level of rent as you would possibly achieve in the private market, they will often manage the letting and will be more likely to be a reliable source of payment.
Student tenants can be found rather easily by advertising with the accommodation department at the local university or colleges. By advertising through these higher education establishments, you will at least be certain that your student tenants are bona fide students. However, this does not guarantee that the property will be well looked after or that the rent will be paid regularly.
Using an agent to locate tenants has several advantages, as they will perform the necessary background and credit checks on your prospective tenants. They will also take and hold a suitable deposit which can be used to carry out any necessary repairs, at the end of the tenancy.
Alternative Ways to Guarantee Rent
If having a regular rent is absolutely fundamental to your investment, then you may wish to take additional measures to ensure your rent. There are insurance premiums available for landlords to protect against non payment by tenants. If the tenant does not pay, the rent on the property is void and the insurance policy will pay out the difference. Typically, premiums are around 3 percent to 4 percent of the annual rent, although the costs of these premiums are deductible for the purposes of income tax.
Renting a buy to let property to DSS tenants (i.e. those on housing benefit) can offer a guarantee of rent, provided that you are paid directly by the council. Bear in mind, however, that if the tenant has lied about their living arrangements, the council may pursue you as the landlord for any repayments due.
Selecting suitable tenants requires a targeted approach;
using an agent will ensure that the tenant undergoes suitable credit and background checks; and
consider extra protection such as rent guarantee insurance policies.