There’s no doubt that the property market in the UK has slowed in recent years, making the concept of “buying to let” far riskier than it once was. This trend has also been compounded by recent tax changes and the decision to add a 3% surcharge in stamp duty on additional properties back in 2016, creating a much less favorable market in which to operate. Despite this, the buy-to-let market remains a popular option among investors, particularly those who are keen on the idea of securing a store of wealth and accruing long-term gains.
However, it’s crucial that landlords strive to avoid these common mistakes which undermine the long-term success of property rentals, especially if they’re to achieve their financial objectives.
Setting the Wrong Price Point
We’ll start with the most important consideration, which is setting a viable rental price that can be sustained in the real-time market conditions.
Although you may have an optimal price point in mind when initially renting out your property, there may be a need to compromise if you’re to avoid having it sitting idly on the market for a considerable period of time. The key here is to plan your finances carefully, with the objective of creating a price that’s balanced and capable of offering value for money from the perspective of potential tenants. By creating a price range as a landlord, you can operate flexibly and compromise on your rental price without impacting too harshly your profitability.
To set the right price, don’t be afraid to compare other values advertised within the region, while also taking into account any prevailing macroeconomic factors.
Failing to Expect the Unexpected
We’ve already touched on the potential impact of owning a vacant rental property, as this will see your revenue cease while the costs associated with owning a home (including monthly mortgage payments) continue to mount. With this in mind, one of the common mistakes made by new landlords is the failure to protect the continuity of rent, in instances where tenants abruptly leave without notice or refuse to pay their rent as part of an ongoing legal dispute.
As a result of this, you should always expect the unexpected as a private landlord, while looking to partner with an insurance expert such as Homelet to create a much-needed safety net should the worst-case scenario arise. In simple terms, this will allow you to take out an insurance policy against lost rent and revenues, creating a contingency plan that will cover this most basic of costs while you attempt to resolve the issue or find new tenants for the property.
Creating a Poor Presentation and Poor Furniture
While tenants may not be able to own their own property, they want to create a home within any living space that they rent. So, it’s crucial that you create an interior space that potential tenants can visualize themselves living in, without the need for them to make massive changes. To achieve this, you’ll have to get the presentation of each room just right, ideally by creating a balanced aesthetic that’s minimalist in part but also finished with some neat and homely touches.
If you’re advertising a furnished property (which is recommended if you want to charge a price premium), it’s also wise to ensure that you have high quality of chairs and tables to successfully engage tenants. Otherwise, investing in furniture represents a false economy, and one that will ultimately increase your costs without translating into bottom line profits.