Recently as I have started to get out finances in order, I have been investigating the potential of residential lettings.
But as ever when looking into making a new investment and financial commitment its imperative that you go in with your eyes wide open. I have some experience with rental property but this is limited to the commercial side of business.
My biggest fear would be tenants defaulting on payments rather than damage potential tenants might inflict on the property, perhaps I have just been watching too much Can’t Pay We’ll Take It Away! Well I take that back some of the properties have been left in a right state – not something that I would be keen on cleaning up after!
There are companies out there like homelet.co.uk that can really help put your mind at ease, of course with a small annual fee, insurance can be put in place for the property, cover includes payouts for damage done to either furnished or non-furnished premises, but an additional add-on that has really got me thinking about purchasing a residential premises is the rent guarantee, payable if your tenant does default on rent (it also come with legal fees to assist in recovering the debt)
Along with the insurance aspect, they can also assist with tenancy referencing, which can be an arduous task in itself.
If I were to press forward with purchasing property its important to remember we are currently in a state of uncertainty with the Brexit still effecting the pound, don’t get me wrong lenders are still lending but as we draw nearer to negotiating the exit could temporarily effect rates.
I would want to ensure I have a ridged plan in place, such as regular communication to my tenants, annual check up and review would also help put my mind at rest. Having been a tenant myself years back I became accustomed to visits from landlord or letting agents.
One final note I have made on the subject of rental investment is the government changes that have or shortly will be in place, removal of 10% wear and tear as an allowable expense in favour of actual costs and the tapering back of interest tax relief on mortgages to be capped at 20% by 2021 (currently if you are a higher tax payer you can benefit from up to 45% relief)
What ever you decide to do its important you get proper advice before committing!