Here are our top ten tips to achieve a hassle-free, profitable buy to let property.
1) Pave Over That Garden
Landscaped gardens might be an asset to some tenants, but most will be quite happy just to have somewhere to lounge during the warm summer months.
The gardens of buy to let properties are often best designed with ease of maintenance in mind, as this will help keep them looking attractive even when the property is empty.
It will also mean less time and money needs to be spent on acquiring contract gardeners, if you don’t intend maintaining the grounds yourself during the occasional void period.
Even an expansive garden area can be transformed into eye-catching courtyards and patios with the right style of paving, which removes any necessity to attend the property every weekend to cut the lawns and weed borders.
2) Go Frost-Free When Buying White Goods
Tenants rarely apply the same care and attention of landlord supplied appliances as they would if they owned them themselves, and this is most certainly the case with items such as a freezer unit.
Unfortunately, the usual pattern of behaviour for tenants is to wait until the last day of a twelve-month tenancy before they remember to defrost the freezer.
They then make a complete hash of the job, because so much ice has built up; so they break the pull-down drawer units by forcing them and attack the ice with the biggest bread knife they can find.
More often than not, they irrevocably damage the unit and render it useless.
Even though frost-free units cost a little more to buy, they are worth their weight in gold and are more likely to survive the rigours of several tenancies, rather than just one.
It often makes financial sense to employ preventative measures than deal with bigger problems later on.
Some may think ‘if the tenant destroys an appliance, the tenant will pay for it as a deduction from their security deposit’.
But the advent of Tenancy Deposit Schemes in 2007 is likely to thwart that belief, since deductions of 25 per cent depreciation a year plus fair wear and tear will undermine the cost of buying replacement items – and that assumes the landlord is able to prove the loss was caused by the tenant’s undue care and attention in the first place.
3) Never Supply A Television Set
Unless the buy to let you are investing in is at the very top of the rental supply ladder, don’t supply a television set with the property.
Hi-tech equipment is expensive to supply and difficult if not impossible to repair when it breaks down, which means it usually has to be replaced.
In addition, the landlord will be liable to provide evidence of having a television licence during periods when the property is untenanted. These extra expenses are unwarranted and merely serve to reduce annual profit.
4) Install Card Meters
There are three advantages to converting gas and electric meters to pre-pay card-meters in buy to let properties.
Firstly, if you are managing your own property, it saves both the time and cost involved in taking meter readings and informing the utility companies at the start and end of each tenancy.
Secondly, as tenants tend to vacate leaving a small amount of credit on the meter, there is usually enough of a surplus to provide lighting and background heating between tenancies, while the property is empty and being viewed by prospective new tenants.
The standing charge and cost of energy consumption between tenancies would ordinarily fall as a charge to the landlord, but this arrangement prevents such a liability arising.
Finally, the gas and electric suppliers will never again try chasing you for unpaid final bills belonging to the vacated tenant.
This often happens with tenants that have absconded mid-way through their tenancy or those that leave without providing a forwarding address.
The utility companies have no right to seek recompense from you (unless the contractual supply account has been left in your name), but this doesn’t always prevent them from trying.
5) Protect Bathrooms
Tenants never take quite the same care in a rented property as you might in your own home and bathrooms are typically problematic.
Splashes and leaks from basins, baths and showers often go unreported until tenants get fed-up with the irritation, which means any carpet laid to the bathroom gets saturated, stained and mouldy.
Even worse, if left long enough, a small leak can cause floor and dry-lined wall timbers to rot.
These are expensive and common problems for many landlords and since prevention is always better than cure, laying vinyl instead of carpet is an easy and economical remedy.
Where possible, run the vinyl up the skirting a few inches to stop water getting underneath to the floorboards and joists or alternatively fill the gap with flexible silicone after painting the timbers.
6) Save Your Sofas By Having Fitted Covers
Sofas and chairs are a major expense and smart new suites can quickly become stained and shabby over the course of a six or twelve month tenancy.
Replacing them every tenancy is not a viable or economic option, but leaving grubby furniture in the property may discourage new prospective tenants taking up occupancy and cause prolonged voids.
This situation is best avoided when stocking your property with furniture by purchasing suites with washable loose covers.
These can then be professionally laundered at the end of each tenancy, which is a great deal cheaper than having to replace the sofa and chairs every time.
7) Buy Blinds Instead Of Curtains
Window blinds are usually cheaper to buy than curtains, unless the windows in your buy to let property are of a standard size that allows you to buy off-the-shelf.
Blinds are also more fashionable for modern properties and can be wiped clean at the start of each new tenancy.
If you feel curtains are more appropriate, look for unlined machine washable fabrics to save on professional laundering costs.
8) Buy To Let All-Electric Properties
The Gas Safety Regulations require that landlords have an annual gas safety inspection of their property conducted by a Corgi registered engineer. And you need an up to date certificate proving appliances and pipework conform to the safety standard.
Currently, there are no equivalent regulations for electricity – the law simply states that electric installations and appliances must be provided in a safe condition for the occupier’s use.
The cost of the gas safety inspection and certificate varies widely. It also increases proportionately according to the number of gas fires, boilers and other fixtures contained in a property. It is worth bearing this in mind when investing in a buy to let unit, because this annual expense can be avoided completely if you buy properties that are ‘all electric’.
9) Replace Old Windows With New – And Get Tax Back!
The distinction between making an improvement or a repair is an important one for buy to let investors in the UK.
While an improvement is considered a capital expenditure (deductible against any eventual capital gains tax liability), making a repair is usually an allowable expense that can reduce the annual income tax bill.
HM Revenue and Customs has recently decreed that old single-glazed windows can be replaced with modern double-glazing and the cost will be considered a revenue expense.
In other words, you can replace your old rotting timber frames with UPVC double glazed units, reduce your painting and repair costs and claim the entire amount spent back in income tax allowance.
10) Major Repairs
There are two ways of dealing with planning for the expense of major repairs and other ‘irregular’ expenditures.
You can try to define what will need doing and when, costing these pieces of work out for your forecast. The downside of this is that it can take no account of fire damage, storm damage, or any other catastrophe that may befall your property.
Or you can pick a figure – the more cautious and risk-averse you are, the higher this figure will be – and try to keep this back as a fighting fund to cover the expected extra expenditures and, perhaps, cover even the unexpected ones.
Your decision over this will, of course, depend on the properties you own. If you are focusing on buying discounted new-builds off-plan, then you can quite safely assume that there will be no major repairs, and those that do crop up will be covered under guarantee.
In such a case, your fighting fund for major repairs may well be much smaller (if, indeed, you have one at all) than if you have a portfolio of older properties that you know will need re-roofing before you come to dispose of any of them.
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Daniel Peacock