Introduction

Acknowledgements

Acknowledgement is given to LG Regulation and ANUK for the source material.

Crown Copyright material is reproduced with the permission of the Controller of HMSO and the Queen’s Printer for Scotland.

Introduction to Subject

The Private Rented Sector [PRS] is expanding and Buy-to-Let mortgages allow property investors to acquire a mortgage to purchase a property to let out, with rental income covering mortgage repayments. If you are thinking about purchasing a property to let out, you should consider the benefits very carefully. Some of the matters you should consider are:

• the demand for rented accommodation in the area in which you are considering investing. In many areas, including popular inner city locations, there may be an oversupply of rented accommodation and therefore it could be difficult to rent the property out
• the achievable rent and the amount you would need to charge to cover your mortgage and other outgoing costs
• the profit margins
• all costs like repairs and letting expenses - advertising and professional fees
• how much of the year you can afford to have the property vacant. Every landlord should allow for about a seven per cent void rate for vacancies or turnaround times between occupants
• the ability to pay your mortgage if the tenant stops paying their rent or you have an unexpectedly large repair bill
• the sort of market you will be entering. Each has its own characteristics and particular benefits and problems
• the potential investment return. You need to be realistic about the returns you will achieve. It is more realistic to expect lower short-term gains and higher long term profits
• your degree of experience managing property and tenancies. The knowledge and skills needed to be a landlord are considerable.