The property pitfalls that buyers can avoid when buying a property to let
2017 was a tough year for the buy to let market, with new property taxes and tighter lending rules. Adding to the stress is the new threat which seeks to shift the burden of tenant fees onto landlords later this year in England.
Despite all the downsides, there are still new entrants to the property rentals market who are keen to look at the yields that property investment can still deliver. So, as a potential first-time landlord, what should you look for in a potential property to let?
Steve Bolton, property investment millionaire and founder of Platinum Property Partners, a franchise business for landlords, told the Telegraph that he takes a fairly scientific approach. Using Office for National Statistics data he identifies areas where there are populations of at least 20,000 working-age people. He then marries this against information about property prices and rents. Higher than average rents indicate stronger demand in an area.
However, with rentals in high demand throughout the UK, few landlords are struggling to find tenants provided you are asking reasonable rent, the property is well maintained and you are using the right letting agent.
Managing Director of Estate Agent Software, AgentPro, Gareth John, says most of his letting agency clients advise landlords to speak to them BEFORE buying a property.
“It’s simply common sense for landlords to speak to their letting agent and find out what tenants are looking for, rather than just buy and hope – plus landlords who buy without seeking advice could find themselves spending more and making lower yields than they had intended,” he says.
Expensive property repairs can be easy to spot if you know what you are looking for. Many first time landlords will want to get that first property purchased and rented with the minimum of outlay and may not have much of a budget to spend on renovations.
Rule number one If you need to let a property out fast is to look beyond first impressions – cleaning, gardening and repainting is cheap and easy, but structural repairs will undoubtedly cost more to put right.
You can’t expect tenants to ‘live with’ issues, so when trying to decide which repairs are essential, think about protecting your investment. Look for a property that will be safe and comfortable for your tenant, and with no hidden surprises for you. Uneven paving slabs or poor exterior stair lighting are maybe things you would ignore in your own home, but you don’t want to incur liabilities if tenants incur an injury when the landlord has failed to rectify clearly identifiable hazards.
Cash buyers are often tempted to skip the survey – don’t. Take a close look before signing, and make sure you thoroughly assess the costs and timeframe of any remedial work that a survey identifies.
For example, damp is one of the hardest issues to resolve. Unfortunately damp walls and ceilings can be easily and cheaply masked with a fresh covering of paint by a seller, but the mask won’t last long and a mouldy wall could end up costing landlords a fortune in repairs. A full survey should identify major damp or subsidence issues which could be a major expense further down the line.
Even relatively easy things to fix structurally can cost more than you think. Property expert & window/door wholesaler Chris Cody from Mister Window (http://www.misterwindow.co.uk) says new landlords often underestimate the cost of installing brand new windows and doors, thinking a lick of paint or a new handle with do the job:
“That small hint of trouble can quickly become a major expense. We have a lot of landlords who buy from us direct – we give them good prices for replacing windows and doors. However. many of them could avoid costly replacements and unhappy tenants in the first place, simply by knowing what to look for. Every property is worth a second look in different weather conditions to the first viewing.
“Buyers can pick up signs of potential repairs. For example, in double glazed windows, misting in between the glass is a sign that the window could need replacing – and if a window is jamming, it could just need new fixings – or possibly a whole new window. Try fully opening and closing windows before you buy, and ensure that fixings all work and have not rusted. If just one window needs replacing but you can’t find matching windows, you may need to replace all of them – even if it’s cheaper with us, it’s still an unwanted expense that comes out of your bottom line.
“Likewise, if a property has old wooden windows, don’t just assume that a lick of paint will sort out any problems, ensure that the wood is solid, and that there are no signs of rot or woodworm. Check insulation too, the new energy ratings could see you with an un-rentable property if the property does not reach the required EPC standard.
“Sellers can easily cover dodgy wood with a lick of paint, so don’t assume if doors and windows look ok, that they will be adequate. Inspect them, interior and exterior for integrity. Sashes on windows that don’t have a tight seal could allow noise and draughts to travel through the property, leading to unhappy tenants, and potentially a big bill for the landlord.
“Similarly. front doors that catch slightly when opening and closing are often ignored by landlords. This could indeed be a small fix, but they could also indicate the need for a whole new door. Check too that exterior doors are fit for purpose – a good exterior door won’t be cheap.
Don’t just assume any door will do, and make sure that a previous owner has not fitted an interior door onto the exterior – this means the door could fail in heavy rain (and yes, we have seen this happen!)
“Finally, check gutters and roofing for efficiency. Dripping, cracked gutters that appear neglected could have damaged the foundation of the building over time. At the very least, they will need to be replaced. MIssing roof tiles will also need to be replaced and cracked walls could indicate subsidence. Any of these jobs, which may appear minor at first glance, will require specialist attention and are therefore not quick or cheap to fix.”
That all important first rental could be either your worst nightmare or your wisest investment. Our advice is to think carefully, seek advice and look beyond the decor when buying – after all, you may not be living there, but you will be footing the repairs bill.
Written by Chris Cody – Contact: lisabaker@itcs.co.uk
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