What profits can be made from renting property?

1 Jun
2012

You may be looking at doing a house or home up in order to put it onto the rental market for tenants. This completely changes how you look at how you design it, as you’re designing it for somebody else to live in, and for ease of maintenance, rather than your own personal style, so it adds its own challenges. There are also further challenges involved with running the propety afterwards.

Although the buy to let market is not a buoyant as it was a few years ago, it remains strong and there is still much profit that can be made from renting a property.

With the current slump in property sales there are plenty of bargains on the market and as getting on the housing ladder has become prohibitively expensive for anyone unable to raise a 20% deposit, the number of people renting accommodation is increasing.

Typical yields on a rental property are around 7%, but this depends very much on where the property is located. If you are willing to let the property to students and it is located in a popular student area, then yields are likely to be much higher than the figure stated above.

If you are considering a buy to let mortgage, then the best rates are available with mortgages for a maximum of 60% of the property value, though it is possible to obtain BTL mortgages of up to 75% of value.
Unless you do all the work yourself, a lettings agency is likely to charge you around 12% of the rental income. Other expenses are cleaning, redecoration and maintenance. You may choose to pay the utilities bills or your tenants may pay them; normally your tenant will be responsible for council tax, though you will be charged at a reduced rate when the property is unoccupied.

Remember that you must pay income tax on your net rental income after deducting allowable expenses and allowable expenses relate only to expenses incurred as a direct result of letting the property. These include the cost of utility bills (that is if they are not paid by the tenant), repairs and decoration, ground rents payable by the landlord, letting agency charges, some legal fees, mortgage interest, gas safety certificates, and insurance.

One way to reduce the risk is to look at the information about endsleigh insurance online. They offer both contents insurance, and landlords insurance.

InteriorDesignLV

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