Buy to let?

[clipperjay]

Houses are a bigger risk than small flats near city centers on buy to let 
If chuff was renting my place I would insist double deposit! 

[dubber36]

Houses are a bigger risk than small flats near city centers on buy to let 

The OP comes from Shropshire. We are lucky enough to not have any cities, so if he wants a property to let that's close enough for him to keep an eye on, it'll be a house. People in the sticks like to have their own bit of space around them, so there will always me a better market for houses than flats round here.

[clipperjay]

Depends really investors tend to buy whats hot rather than locality, like guaranteed capital gains and rental yields, but I hear what you are saying though.
Off plan comes to mind you might get 10% increase once phase of plans have even been built finalised before a mortgage kicks in.

[VW BUSH]

but its not beyond reason that regulation of the private rental market could make a comeback.

You realise that Labour isn't it power and that sort of thing went out with the ark, right?

Far more likely is a rise of several percentage points on the base rate.  See what that does to your figures.

Very true

Interesting articles:

Scaremongering
http://moneyweek.com/endofbritain/

Debunk
http://anotherangryvoice.blogspot.co.uk/2013/01/moneyweek-and-their-end-of-britain.html

Truth lies somewhere in the middle as always, but one things for sure and that's the rates cant get much lower.
In situations like this you win big or lose it all so you need to be sure of your employment and finances.
We lost a wage packet in 08 and got stuck with 30k on cards and a one bed flat, just about clear now and looking to move

[Gnasher]

I would say that unless you are paying your mortgage off super fast, with 50% equity, you are going to (at the bare minimum) break even, perhaps make a semi decent profit on it. With that in mind, I would go for it, with the following proviso's...

1. Go through a reputable and recommended letting agent - a fully managed package is somewhere between 10-12% of rental income.

2. Ensure you have a buy to let mortgage. You will probably get a slightly worse rate than a standard mortgage but at the moment rates are low, so it could be a good time to change mortgage anyway. Remember that you might get a 'lock-in' period for your new mortgage (normally the same amount of time as your fixed rate if you get it), so ensure you intend to rent for longer than this.

3. Get a decent landlords insurance policy.

4. Get (something along the lines of) British Gas Homecare - the best cover you can afford.

5. Ensure you let the taxman know about it - you'll need to pay tax on any profit.

6. Once it is rented out, ensure you put away the majority of the first 6 months/1 years rent (or profit if you use it to pay your mortgage) just in case you get a period of it not renting out - some letting agents will guarantee the property is rented out for something along the lines of the first 6 months, so you'll be safe for a while, but after that, there's no guarantees.

Remember as well, that any expenses you have with the house (letting fees, insurance, homecare) can be offset against tax (IE, you get tax relief on them and will therefore only pay tax on the profit, rather than your rental income).

I rent my house out as I am out of the country for 4 years - although I don't make a profit, it's nice to have someone paying my mortgage for me!

[Booth11]

As said, your first consideration is whether the property is a good investment.  If there are question marks over this, then selling maybe the better option this time round.   

Secondly, ensure you use a reliable letting agent.  You will need to decide whether you wish to go for fully managed service or for let only.

Fully managed service is best option if you do not live near your let property or do not have the desire or confidence to manage things such as maintenance and repair yourself.  However, If you are likely to be living close by, then don't discount an agent 'let only' service, whereby they will find the tenants and do all the contract/collection of rent/deposit side but as the landlord you would manage some aspects of the let yourself, such as maintenance and repairs etc.  Of course you'll need to factor annual costs for maintenance/repair plus cleaning and redecoration (between lets), so it needs careful consideration and many prefer to pay a higher % to an agent to take care of this, but it can work.

My partner and I have been letting out property for 15 years using a letting agent on a let only basis and it suits us.   We live only couple of miles from our properties so are close at hand.  It's a reasonably sound investment in an area awash with students, but we generally only let to mature overseas students.  We've never had the properties empty for longer than a month, thus limiting the financial burden.  You need to carefully look at the rental market in your area to avoid long periods without tenants, which will be the killer.

Would you let the property furnished or unfurnished?