What to look out for when buying a rental property? - Richard James Estate Agents

What to look out for when buying a rental property?

Within the last 12 months*, the average price of a home to buy in Swindon has risen to £254,003, which is over 9 times the average salary earnings in Wiltshire (estimated at £27,000*). This means the rental market in Swindon is on the rise, as more and more people earning average salaries simply cannot afford to save the deposit sums required.

We’ve all seen the increasing reports in the media of ‘Generation Rent’ therefore, landlords must be providing affordable, good quality homes to potential renters to keep up with this demand. It is now estimated that there have been over 170 different legislation implementations, with changes in the private lettings sector in the last 5 years too, meaning it is difficult to keep up and ensure you are compliant as a private landlord. 

Investment property remains a lucrative business and an area we still see new landlords entering into and contacting us to take on those legal liabilities. Typically, we get lots of calls for advice on where and what kind of property to buy to maximise investments from newbie landlords and below are our top tips to keep in mind if you are a landlord, considering investing in property in the local area…

CONDITION OF THE PROPERTY

When researching investment properties, ensure that you make the condition and the décor of the property one of your highest priorities. All tenants want is a blank canvas, so white walls and neutral, hard-wearing carpets are a must. Also, if you make it easier for tenants to personalise their new home, it’s not only easier for them to visualise living there during the viewing, but they will be less likely to want to make drastic changes like painting and making holes in walls later on!

You should put up picture hooks in readiness, add curtain poles and shelves which tenants can add belongings to, to make their own. Also, consider that newer properties will require less upkeep in the long run, and although period cottages may seem like a great idea initially, you will be footing the cost of expensive structural repairs later on down the line. Repair costs eat into your annual yield, which means the properties with the lowest ongoing upkeep costs will be the better investment in the long run.

LOCATION

Whilst it is a good idea to focus on items like transport links, what is most important is that a tenant is renting in the right location for their needs. First, work out which market are you aiming at. If you are looking at the younger generation, you will want to consider town/city centre locations with good links to local Universities, Colleges and shops. However, if it is families or professional sharers you are pitching at, consider suburban quieter areas, with great commuter access and strong links to communities.

AFFORDABILITY

When a tenant wishes to take a property, we advise them that they must multiply the monthly rent on a property by thirty-two, and this must equal their annual salary before tax. For example, if a tenant wanted to take on a property at £700 a month, they must be earning an annual salary of at least £22,400 to afford the property, obviously couples who are sharing the rent will be better off with this but for lone tenants, many agents are hesitant to grant the let unless this applies. With rents reported to be taking up 36% of earnings, it’s essential that tenants live within their means, otherwise life will become a struggle, and it’s likely the first thing to give will be your rental payments.

Make sure the rental properties you look at are within an average affordability range, otherwise if pitched towards higher-earning tenants, you are decreasing your potential tenant pool and may end up regretting the decision later when applications are low.

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If you would like to discuss any of the above, please feel free to get in touch. We are only a phone call away! Call Nicky on 01793 431 725.

Please Note: All statistics cited relate to data captured in September 2020. *Sources: Data Loft Inform and Payscale

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