Think carefully before securing other debts against your home.
Your home may be repossessed if you do not keep up repayments on your mortgage.

Important considerations

If you're considering making an investment in a Buy to Let property, our handy guide aims to highlight important considerations before taking the plunge.

Location Secrets

Location is key when you're looking for a Buy to Let property, but the secret is to forget about your own preferences and think about where potential tenants will want to live. A good location is one that attracts a steady stream of tenants, ensuring the shortest possible void periods.

Judge the amenities and transport links of each area with a picture of your ideal tenant in mind. For example, you need to think about where your tenant is likely to work or study and how they are likely to travel there. Try reading the Accommodation Wanted posts on local websites for an insight into what tenants are looking for.

Mortgage affordability

One big advantage of Buy to Let mortgages is that lenders look at future rental income when deciding how much to lend you. Lenders will want to know what your salary is, but it isn't the most important consideration. This means that if you're on a low income, you may be able to borrow more on a Buy to Let mortgage than on a regular residential mortgage.

Most lenders will require monthly rental income (rental cover) to be at least 125% of your monthly mortgage payments.

Management options

As a landlord, you need to decide how much you want to be involved in the management of your Buy to Let property. The biggest consideration here is probably cost: a full service property management agency could charge a substantial chunk of your rental income, which will be a problem if money is tight.

Think about what aspects of property management you can do yourself and which you would be happier delegating. It's possible to use a letting agency just for certain aspects of the letting process, such as marketing the property or collecting rent payments.

Dealing with disputes

You are required by law to protect your tenants' deposit, either by paying the money into an approved tenancy deposit scheme or by paying a premium in an insurance-based scheme. This should then be returned to the tenant when they move out.

However, there may be circumstances in which you do not believe that tenants are entitled to the full deposit, for example if there is damage to the property beyond normal wear and tear.

Avoid disputes at the end of the tenancy by taking action early. Before the tenant moves in:

• Prepare a full inventory listing what is in each room and detailing the condition of the property.
• Inventory should be agreed between you and the tenant. This will make disputes about damage or stolen property much easier to clear up.

Returning deposits

You are expected to return the deposit to the tenant within ten days of their moving out. This means that if there are any queries over returning the full deposit, you should contact the tenant as soon as possible to let them know.

Many problems can be resolved by negotiation between tenant and landlord, but if you can't agree you can use the Alternative Dispute Resolution (ADR) service. This will be offered free by the scheme protecting the deposit.