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Posted by Let Alliance on January 26, 2011
Stagnant house prices and increasing demand from tenants could provide a good opportunity for landlords.
With many potential first-time buyers unable to get on the housing ladder, demand for rented properties is high. So would-be landlords with plenty of capital have the chance to snap up a bargain.
Potential landlords need to understand the risks. The last housing boom saw more than a million people become landlords as they sought to cash in on rising prices. Many lost substantial sums when house prices slumped.
Landlords today focus on the regular income they receive from their property rather than the gains of house price rises.
Kate Faulkner, of advice site www.designsonproperty.co.uk, says: ¬†’This will be a good year to become a landlord. However, with regional variations on house prices you must choose property carefully.
‘It’s important to talk to letting agents about the area and what types of property tenants want.’
Rental income averaged about 4 or 5 pc of the property’s value last year, according to the National Landlords Association – though this depends on the location and property type.
On a ¬£100,000 property the landlord could expect to get about ¬£4,000 to ¬£5,000 a year in rent. Profits, after expenses, are taxable.
If you want to become a buy-to-let landlord, you will need a good deposit. However, competition in the buy-to-let mortgage market has improved recently, with several banks reducing rates and fees.