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Market knowledge 'fundamental' to successful buy-to-let investments

30th May 2012

Making sure you research the market is one of the most important aspects in making a successful buy-to-let purchase, landlords have been advised.

High demand from tenants has helped to push up returns in the rental market in recent years, meaning landlords stand to make healthy profits from their portfolios.

Indeed, figures released by the Royal Institution of Chartered Surveyors this month revealed that 13 per cent more chartered surveyors reported rents rose rather than fell in the three months to April 2012 with gross yields from rental properties growing in every part of the UK except London in the first quarter of the year.

However, those tempted by such figures to invest in buy-to-let properties have been warned by the Residential Landlords' Association that making a return on a rental property requires careful research and planning.

"Do your research," said the organisation's chairman Alan Ward. "Market knowledge is absolutely fundamental to buying into the private rented sector, but nonetheless you have to be absolutely sure of the tenancy market."

One of the most important things to do is to find out what tenant demand is like in the local area where the investment is being made.

Investors will also need to consider what type of tenant they want to let their property to.

"The student market for example is subject to all sorts of absurdities over the next 18 months. Because we don't know the numbers of students that are coming in next September," said Mr Ward.

There are also a number of legal obligations landlords need to take into account, which may vary between regions.

"In more than 30 local authorities you will need planning permission to allow you to rent a house to a group of sharers," noted Mr Ward.

"The recent changes to deposits which means that you've only got 30 days to protect your deposit means that there are an awful lot of landlords who have got caught by this," he added.

Finally, property owners will need to think about what type of insurance they need to adequately protect their investment.

For example, those with little spare time or who live far away from the property may want to take out landlord emergency cover, to make sure any emergency repairs are carried out as quickly as possible.

Posted by Megan Statham

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