How to choose a buy-to-let property
What kind of property makes a great rental investment? Is it better to buy an old or new home? What sort of location will attract the tenants you want? And what should you look out for to avoid buying into hassle? These questions and more are answered in this blog to help you identify the right kind of property to begin or expand your portfolio
While there's a person for any property if the price is right, being a landlord is about getting the highest return. So, when you're choosing a buy-to-let property, your priorities should be continuous occupation and ease of finding tenants: anything too specialist, no matter how lovely, might prove hard work.
Staying focused on homes that will work as a business is the way to make your landlord life as easy and profitable as possible.
Flats above shops
In the residential sales market, flats over local parades of shops - often in Victorian or 1930s buildings - are among the least in demand from owner-occupiers. There is little cache in living above the dry cleaners or newsagent, and many people don't want to buy a property on a main road.
The other side of the coin is that shopping parades are usually in the centre of a neighbourhood, which immediately makes them convenient for socialising, shopping and public transport — three important factors for tenants — which makes them great locations for easy lettings.
Flats above shops - along with homes on main roads in general - are often larger than their conversion counterparts in residential side streets, giving you more floor space for your money and potentially more rent. If your business model concentrates on yield rather than capital return, flats over shops can be a good choice for a landlord.
Be mindful of the types of businesses that occupy the ground floor: not just below the flats but also in the adjoining buildings. Does a shop have access to any of the communal areas, or is a takeaway pumping out smells that drift up through the building or past the windows? A cool coffee house is different to a late-night kebab shop, so make sure you visit during opening hours to get the full picture (and smell!).
If you are buying with a mortgage you will need to check what restrictions they may have in lending on a flat above a shop.
Conversion apartments
Victorian, Edwardian and Georgian houses converted into apartments are consistently popular with renters and owner-occupiers alike, meaning plenty of demand when you're looking for tenants and also when you come to sell. From a resale point of view, the more original character the better, although you'll definitely pay for it.
One of the major appeals of conversions is the low service charges they attract because there are usually no facilities to maintain. However, that can translate into owners having no interest in spending money to look after the building. Check for tell-tale signs of poor management: scruffy communal halls with threadbare carpets; neglected exterior decoration; overgrown garden areas.
If the owners of the flats have bought the freehold, they could collectively decide to keep expenditure to a minimum rather than upkeep to a maximum. Alas, landlords can be the main culprits as they don't have to witness the building's dishevelled state every morning and evening. And when there's no one enforcing the maintenance covenants of the leases, things will inevitably deteriorate.
That doesn't mean there aren't beautiful examples of lovingly maintained period conversions owned by people who take genuine pride in their building. Still, it's worth asking how many apartments are rented and how many are lived in by their owners to gauge how easy it might be to keep things looking their best.
Finally, listen for whether you can hear the other neighbours. Older conversions are notorious for their lack of soundproofing, particularly those from before the 1990s, and sound transference can be an issue. Some people don't mind and see it as a part of life, but it can become an unresolvable conflict between residents and result in regular tenancy changes.
Purpose-built flats
Over the last 20 years or so, the standard of newly-built property has increased dramatically in the UK, with many new developments focusing on contemporary architecture, high-quality specification and sleek design.
Buildings with residents' facilities, from lifts and gardens to gyms and porters, have created an entirely new housing stock that young professionals and creative people have enthusiastically adopted. They favour a modern, forward-looking and energy-efficient lifestyle over the drafty and creaky character of older buildings.
Check for hefty service charges and good management as these buildings and their extras don't necessarily come cheap, but when they're well-managed, they're extremely popular with both renters and owner-occupiers. Since modern architecture moved on from the 80s & 90s when new-builds tried to emulate older buildings, those developments with fewer facilities attract lower sales values, but their yields are generally good.
Finally, purpose-built apartments from the 30s, 60s and 70s are once again in vogue with fans of art deco and mid-century design. As well as checking for good management and regular maintenance, it's worth investigating with older buildings whether any large bills for major repairs are on the horizon.
Little houses
The two-up two-down Victorian cottage is a staple of the rental market and offers a perfect layout for a pair of sharers with bedrooms that are generally equal in size: this removes conflict and injects fairness and longevity into the tenancy. Also ideal for couples and young families, they are an endearingly popular choice and well worth your time as a buy-to-let investment.
Where we'd advise caution is for little houses with an extremely tiny third bedroom because they won't appeal to the broadest section of the rental market. When a third bedroom gets squeezed into a home that wasn't designed for a large household, it can become the runt of the litter: perhaps no-one will want it as their bedroom, or the occupant will frequently change, or your tenancies will regularly end.
We advise going classic and sticking with what's proven to work by having double bedrooms wherever possible. The exception would be if a house was an absolute bargain or had an exceptional quality: maybe a unique architectural style or an in-demand location that gives a high capital return.
Big houses
The classic 1930s semi and Victorian terrace have a firm place in the hearts of Brits, from sharers, families and couples to almost everyone else. While the demand for larger homes is generally from buyers, there's still a very decent rental market for the UK's most populous — and popular — houses.
If you're looking to rent a big house to sharers, your priorities should focus on proximity to transport followed by what's nearby for going out, meeting friends and having fun. Victorian terraces are particularly suitable with their spread of double bedrooms split across multiple levels, giving tenants extra privacy for an all-adult household.
Remember that the more sharers you have, the bigger the chance of individuals moving on as their lives take different directions. While the tenancy might not end, the people living in the property could change, resulting in extra wear and tear.
For renting to families, 1920s and 1930s houses with a mix of double and single bedrooms are a good fit. Your smartest move is to check for good local schools - by far the biggest driver for this part of the market - along with on or off-street parking (possibly for more than one car).
Streets and homes in the catchment areas for the best schools are among the most in-demand and most expensive to buy. Focusing on parents' wishes to provide the best education for their children is an excellent long-term strategy for the triple whammy of rental demand, capital growth and easy saleability later on.
If you're looking at buying a modern house to rent out, apply the same logic as above around bedroom sizes, location, nearby facilities and likely tenants.
How was that?
Are you get closer to a decision around the sort of buy-to-let property that's right for you?
If you're looking for your next rental property in Bedfordshire, or you're ready to rent one out, we'd love to help you get things right. Call us on 01525 713111 or 01767 669222 or email us at landlords@urbanandrural.com to speak to our friendly, expert team.
