Mortgage calculator: is it better to rent or buy?

In the past decade more than a million Britons have become landlords as buy-to-let has boomed. The first step to a successful investment is to choose the right property, but what you do next is equally important.

Here is the Times Money guide to being a good landlord, including the main regulations that you must abide by and how you can attract and retain quality tenants.

Attracting tenants

Buy-to-let investors can maximise rental returns

Make sure your property beats the competition by attacting your target market

BACKGROUND

• The beginner's guide to mortgages

• How to buy to let

Even when rental demand is increasing you should ensure that your property is in the best possible condition so that you can attract quality tenants. Make sure that the property is spotless or ask the current tenants to clean up before people are shown around.

It is worth painting rooms in a neutral colour to help potential tenants to imagine their lives in the property. Also, use flowers, candles and the smell of fresh coffee to make the place smell homely. Ask your current tenants to return furniture to its original position and rooms to their original use.

Make time to do your research and pitch the property at the right price. Look on the internet, in local newspapers and speak to letting agents to decide how much you should charge.

You are required to hold an energy performance certificate for your property if you are renting it out to new tenants. The certificate gives an indication of the energy efficiency of your property. It costs about £70 and is valid for ten years.

Legal obligations

You need to inform your mortgage lender of your intention to let your property. If it is a leasehold property, you will need to obtain permission from the freeholder, too.

If you are renting the property furnished, the furnishings must comply with fire and safety regulations. Gas appliances must be checked by a qualified Corgi professional and electrical appliances should be checked regularly by a qualified electrical engineer.

Once you have found a tenant you need to have an assured shorthold tenancy agreement drawn up.

Landlords are no longer entitled to hold on to deposits, so you need to find a tenancy deposit protection scheme to hold the money. You must be able to provide the tenant with details of the scheme within 14 days of taking the deposit. Landlords who do not sign up for a scheme will find it harder to evict tenants with whom they have a dispute.

Keep informed of changes to regulations by joining groups such as the National Landlords Association or a landlord accreditation scheme run by your local authority.

Dealing with tenants

Carry out security checks on potential tenants and run a credit check, which will help to verify not only that the tenants will be able to pay the rent, but also that they are who they say they are.

If you are using a letting agent, it is still worth showing tenants around the property yourself so that you make contact from the outset.

Once they are in place, you cannot enter the property without their permission, or when they are not there. Always be courteous and polite to tenants and sort out problems immediately. It is in your interests to ensure that problems are not ignored.

Supply your new tenants with detailed instructions for your property, including guides to operating appliances and boilers, and ensure that they have emergency telephone numbers and your contact details.

Should I use a letting agent?

A letting agent can introduce and vet prospective tenants, prepare tenancy agreements, advise on and arrange inventory and condition reports and changes to utility accounts and council tax. It can also collect the rent and pay the money to your account. Letting agents will usually take about 11 per cent of the tenant’s total rent as a fee.

The agent can also pay bills on behalf of the landlord and inspect the property, recommending, overseeing and accounting for necessary maintenance, repairs and redecoration. This is called a management service and the agent will usually charge an additional 6 per cent of the tenant’s total rent.

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Five websites

Landlord Law

Communities and Local Government

Direct.gov.uk

Landlord Zone

Health and Safety Executive