Mortgages - Is Buy to Let a Dream or a Nightmare?

 

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A Buy to Let Mortgage for You

Mortgages

Are you thinking of investing in a buy-to-let property?

A great number of people have done so already and according to the Council of Mortgage Lenders, individuals taking out buy to let mortgages rose by 483 per cent in the five years to 2005.

The vast majority of these landlords probably have no trouble at all with their tenants, either by luck or careful vetting, but you may need strong nerves to watch a new television series entitled Tenants From Hell , featuring real-life horror stories regarding the misfortunes of some landlords.

There is the case of the East London property let out in all innocence to a Chinese couple they turned out to be running a cannabis farm! Then there s the 250.000 home, let out to a tenant. There was a disagreement over the rent and the tenant demolished the house with a 14-ton digger. Staggeringly bad news.

Is Buy to Let a Dream or a Nightmare?




Need we go on?

Newsworthy though these stories may be, it does not have to be like that. There are some steps you can take to increase your chances of successfully finding a good tenant.

You should always obtain and follow up references. If the potential tenant is wary of providing a reference it well be sign that all is not what it should be. A credit agency will investigate the tenant s references for you for around 25.

You are quite justified in asking to be shown at least three months bank statements. Ask where the tenant works and find out from their employer how long they have been in employment there. Find out from their previous landlords if there have been any problems with the tenancies.

It may be possible for the potential tenant to find a guarantor. In the case of a student or tenant away from home for the first time they may be able to ask a parent to back them by guaranteeing the rental amount or payment for damage. This would obviously offer you some peace of mind and be an incentive for them to keep an eye on the situation.

Don t be hasty in choosing someone to let your property to. When you have completed the above steps and you re ready to proceed with letting the property, make sure you get the tenant to sign a contract prior to moving in, together with collecting at least one month s deposit or even more. You are entitled to ask for up to 12 months rental in advance, but this is probably over optimistic, depending on your tenant s circumstances. A copy of the tenant s passport and details of their NI number are a good precaution, should there be trouble in the future, as these would be a help in tracing the person if necessary.

With the wrong choice of tenant, should things go awry, it is not easy to evict your tenant or to collect outstanding rental. The court system in Britain is overstretched and repossession cases can take up to five months to process. Obviously this is a frustrating process, not to mention the financial worry involved.

There is another option; you could employ a letting agent. Obviously there will be expense involved but you may be better off overall as they re experienced in handling the whole business. They will take over the vetting of potential tenants and if things don t go as planned they will take action to protect your interests. Our advice would be to make sure you choose a reputable agent and you could ask to be put in touch with some of the agent s other clients, to check that they are satisfied with the service. It s advisable to choose an agent registered with ARLA (Residential Lettings Agents) or NAEA, which stands for the National Association of Estate Agents.

There s a good choice of agents out there. Just log on to the Internet and you ll find all the help you need.


You can find additional technical resources for this article in the technology section at: http://www.proprint.co.uk

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