Buy-to-let market booms as pensioners leap in to bolster nest eggs: The dos and don'ts of property investing
By Nicola Venning
Though interest rates look set to rise, no one knows quite when. Even so, the uncertainty hasn't stopped people from jumping into the buy-to-let market. Far from it.
Recent figures from the Council of Mortgage Lenders show the number of buy-to-let loans has increased by 58 per cent in the past two years and by 17 per cent in the past month alone.
As the Mail reported last week, many buyers are in their 60s, putting their nest eggs into bricks and mortar in the hope of making a good return. But choosing a buy-to-let home - that lets well and is a hassle-free investment - is not as easy as it sounds.
Desirable: Homes with large windows and high ceilings attract renters. If this isn't an option, choose a property that has a south or west-facing reception room
I have three buy-to-let properties, which are all ten minutes from public transport and, therefore, let without difficulty.
But the first two have been better buys than the third. They are easy-to-maintain Edwardian terraces; the third is a flat in a magnificent, but tired, four-third is a flat in a magnificent, but storey Victorian villa.
A faded beauty, my flat is likely to rise in value but, in the meantime, I have to deal with the problems of maintenance.
One the market... Shenfield, Essex
This low-maintenance, three bedroom terrace has an easily maintained rear garden and garage. It's less than a mile from Shenfield Station, which has trains to London Liverpool Street.
Beresfords (01277 888620, beresfordsgroup.co.uk).
BUY: £269,950 LET: £1,200 PCM
Cleaning the guttering - a job that on average should cost £120 - will, on a house this size, be nearer £800 (shared between three flats) because scaffolding is required to reach the roof.
And while it costs from £1,000 to decorate a three-bedroom semi, doing up my flat will cost twice that amount.
Nor is it just period buildings that can be tricky. Almost every type of home has its quirks. So, how do you invest in the right buy-to-let? Here are my tips on choosing buy-to-let property:
What you should do
1 The more light and airy a home, the better. Everyone loves high ceilings and tall windows. If this isn't an option, choose a flat that has a south or west-facing reception room, says David Mills, partner at W. A. Ellis estate agency.
Ensure windowsills, particularly south-facing ones, are painted regularly and kept in good order. It's far cheaper to paint a sill than replace a rotten frame.
City Link is a development of furnished and tenanted one, two and three-bedroom flats aimed at the buy-to-let investor. Opposite Weaste Metrolink Station, it's within walking distance of Media City.
Sequre (0800 011 2612, sequre.co.uk).
BUY: £75,000 LET: £495 PCM
2 Choose a flat with some outdoor space. Often a balcony or terrace is enough 'as not everyone will want the hassle of maintaining a lawn', says Marc von Grundherr, director at Benham & Reeves.
If there is a garden, make it clear in the tenancy agreement who is responsible for looking after it. Better still, hire a gardener to trim and mow occasionally, and include the cost in the rent.
3 If you are buying a flat, try to buy the freehold as well. Or buy it jointly with the other owners in the building. You will then be able to control the running and maintenance costs yourself. Put in place a fund for long-term repairs.
4 Ensure there is parking, and if you have the chance to buy an extra parking space in a new development, do so. 'As much as cycling is growing, people still expect to be able to park next to their home,' says Dan Channer, managing director of Finders Keepers Letting Agency.
5 While many tenants prefer unfurnished flats, it does help to have good quality fitted wardrobes. They look attractive and create valuable storage space (you can never have enough), and avoids tenants moving heavy and unwieldy wardrobes in and out.
A charming two-bedroom cottage that could be a holiday rental or buy-to-let. There's an option to rent out the garage. The delightful town of Totnes has trains to London Paddington and Waterloo.
Marchland Petit (01803 847979, marchandpetit.co.uk). BUY: £220,000 LET: £550 PCM