4 Things to Consider Before Becoming a Landlord

by
GetGround

New landlord laws and the threat of penalties make many prospective landlords wonder if letting their property is worth what seems like a tremendous hassle. 

Fortunately, there are still numerous benefits to being a landlord. Consider these four elements before you begin your buy-to-let purchasing journey.


Always Consider the Pros and the Cons Before Becoming a Landlord

1) Additional Income

To be clear, buy-to-let investing is not a route to getting rich quickly. Typically it takes time for the property to appreciate in value.

But it is still a better investment than accruing interest in the bank. Buying the right property at the right price will see the value appreciate while your tenant contributes to the mortgage (if you have one). The returns can be great, especially if you own the property outright. 

Ensure that you pick reliable tenants, and that rent can cover all the running costs associated with renting. You should also be prepared for possible vacancies. 


Getting into the property game can be challenging and rewarding

Security and Flexibility

Once a property is paid up, your rental income can support you long after retirement. A report by CML showed that more than 30% of buy-to-let landlords invest in property as a form of pension. 

In a worse-case scenario, you can sell or move into the property yourself at a later stage. Owning several properties is akin to being your own boss and running your business which for some can be fulfilling. 

If you manage a complete portfolio, being a landlord can be a full-time job. However, you will be able to set your own hours and make decisions independently. Bear in mind that you’ll also be at the mercy of tenant emergencies at all hours, and it can take a lot of administration.

Property Values

Location matters. If you buy a property at the right time, in the right area, in most cases it will appreciate over time. In fact, the valuation of Britain's £7.56 trillion property market continues to hit new records. It has outstripped the performance of FTSE All Share index, cash and gold over the past 20 years, with property prices doubling, on average, every 10-15 years.

This trend has been strongest in the UK’s capital, London. Data from Property Partners published in 2016, and updated by GetGround for 2021, showed that £100 invested in London’s property market twenty years ago would be worth £1,290 today. Meanwhile, the same amount invested into the FTSE All Share index would be £525, while gold would be £355 and cash savings £266.

Property is typically valued according to the land it’s built on, so even if the building is relatively old, your investment can grow dramatically over time. 

Running Costs

It’s vital to calculate your operating costs correctly. Landlord insurance, maintenance, supply of furniture and fittings, repairs, safety certificates, and of course, the cost of finding a tenant and using a letting agent can add up quickly. 

Agents will charge 10-15% of the rental amount as a managing fee, so if you are confident and able to manage the rental yourself, you can save some money. 

Being a landlord comes with numerous benefits and responsibilities. Consider them all carefully and invest smartly to make sure you experience more pros than cons when letting your property. Make sure to browse our blog to learn more if investing in buy-to-let properties, and being a landlord, is right for you.

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