Becoming a landlord can help secure your financial future and ensure you have an income coming in even after you’ve retired. Low interest rates, robust housing prices and an increasing demand for affordable rental properties mean that becoming a landlord is now more accessible than ever for many home owners.

Whether you dream of building a property portfolio or want to purchase an additional home as an investment, there are some things you need to know before you take the plunge and become a landlord.

1. Calculate your outgoings before moving forward – Unfortunately you won’t be able to pocket all of the money your tenant pays as rent. If you’ve opted to purchase a house through a buy to let mortgage, you’ll need to consider your mortgage repayments. On top of this you’ll also need to pay taxes and allow some leeway for maintenance and repairs that may come up unexpectedly. A good idea is to set your rent at around 125% of the cost of your mortgage.
2. You’ll have legal obligations – As a landlord there are lots of legal obligations you’ll need to adhere to, and understanding these is important. Failing to comply with the obligations could result in hefty fines and even imprisonment. Therefore it’s advisable to put together a checklist and regularly monitor it to ensure everything is up to date. Before you start, you’ll need to check that the person you are renting to can legally rent a property in England. And all tenants over the age of 18 – even if they are not on the tenancy agreement, there is no tenancy agreement or the tenancy agreement isn’t in writing – will need relevant checks. Once all that is complete and you are happy, you’ll then need to consider fire regulations, gas and electrical safety and deposit protection among other areas.
3. Be strategic in where you buy – Carefully research the areas you are considering buying in to weigh up house prices and rental costs. While you want to achieve as high a margin as possible, you’ll also need to look at the competition in the area. If it’s oversaturated for example you may find it difficult to secure tenants. If you are forgoing a letting agency, you’ll also want to make sure it’s accessible for you to do repairs, show potential tenants around and make routine inspections.
4. Think about the day-to-day runnings – You can appoint a lettings agency to handle things such as viewings, repairs and tenant communication but this will come at a cost. If you go down the DIY route however, you will get to keep all of the income which you can use to pay off your mortgage early, put into a savings account or even re-invest in more property. Although on the surface it may seem easier to use an agency, once tenants are settled, aside from bi-yearly checks, there isn’t really much to do day-to-day.
5. Plan ahead with tenants – The biggest drain on costs for landlords is often the times when there are no tenants in the property. You’ll still need to make mortgage payments and maintain the house or apartment, yet you won’t be receiving any income. Building a good relationship with your tenants can help to ensure they give you a longer notice period where possible – and they may even recommend you to friends. It’s a good idea to have some money set aside in case the property is left empty for several months. This will give you some added security and peace of mind.

Do you have any tips for landlords?