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| Why not buy and rent out? |
| Leading mortgage
lenders support the Buy-to-Let initiative from the Association of
Residential Letting Agents, the ARLA.
The scheme is being supported by Halifax Mortgage Services, Homeloans Direct, Mortgage Express and Woolwich Direct. It is seen as the biggest single initiative to expand the private rented sector. "The buy-to-let initiative represents a major step forward for the rental market," says Neville Lee, ARLA president and the man behind the initiative. Adrian Coles, on behalf of the lenders, said that they had been looking for ways in which to encourage renting by increasing the number of landlords offering good quality property. "This was made possible by the growing number of letting agents whose membership of recognised self-regulating bodies (such as ARLA) proves they have the skill needed to select both suitable properties and tenants and for the management of the lettings." "This enhances the credit worthiness of Buy-to-Let propositions, and has encouraged a number of lenders to offer rated that are in line with standard mortgages for owner-occupiers rather than treating private landlords as part of the commercial sector." Mortgage applications through the Buy-to-Let initiative can take potential rental income into account and each lender has tailored mortgages to fit a range of requirements for the investor landlord. |
| Portfolio |
| Some mortgages are
designed to encourage the creation of an investment portfolio of property
to let.
Others are geared to expatriates or through foreign nationals. There are also mortgages that make provide for potential void periods-the periods when a property is unlet - by allowing payment holidays. Mortgages can be on an interest only basis, or repayment or endowment, PEP or pension-linked. This flexibility can also extend to the status of the borrower. Moreover the lenders accept that deliberately high gearing on property to let can increase the return on the initial capital employed. To increase the likelihood of satisfactory returns, optional insurance products cover loss of rent due to accidental property damage, for rental guarantee and legal expenses in the event of defaulting tenants and to cover the emergency repair and maintenance of appliances, heating and electrical systems. "For a large period of time long the private rented sector has been the poor relation when it comes to investment in property. I believe this Buy-to-Let initiative will attract the desperately needed capital into this sector and take private rentals in this country closer to the levels found in the other advances economies." |
| Thinking of Letting? |
| Things landlords
should know
· Take an inventory of the contents and condition of your property. This is essential and should be made up before and after the tenant takes possession and signed by both parties. · Protect yourself and your property with insurance. Legal expenses cover protects against legal action. · Remember, income from lettings is liable for tax. · A letting agent can make life a lot easier for landlords. They will suggest a fair rent, draw up the tenancy agreement, advertise your property, vet prospective tenants and arrange the first months rent and deposit for a set charge. · For a further fee, (usually 10-15% of the rent) an agent will manage the property if it is inconvenient for you to do so - for example if you're abroad. · The agent will make sure the property is maintained and the rent is paid · If the tenancy agreement is properly drawn up there should be no problems with getting your property back at the end of the lease. Legal action for repossession is rare these days, however new accelerated court procedures speed up the process without the necessity for a court hearing. |
| Thinking of renting? |
| Things
tenants should know
· Take along a friend to view a property for a second opinion. · You will have to pay at least a month's rent in advance and a deposit of up to six weeks to cover potential damage. This is held by the letting agent if there is one. · You must abide by the tenancy agreement which you should read carefully before you sign. This must comply with the Housing Act 1988. · The tenancy agreement is a legally binding document that states the length of the tenancy, amount of rent, and your rights and responsibilities. · If there is not a rent book, keep a record of all your payments to the landlord. · If insurance is included in the rent ask for a summary of the insurance cover. · Your landlord has a duty to carry out repairs. · You have a reciprocal duty to take care of the property. |
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