This weekend is an important one for buy-to-let investors for two reasons. Firstly, it's the final chance to complete on a buy-to-let property purchase without having to pay the additional 3% Stamp Duty charge.
And secondly, Easter weekend usually marks the start of a surge in new instructions from sellers looking to move in time for the summer.
With costs for landlords rising and no sign of an immediate slowdown in house price increases, it's more important than ever to make sure you're purchasing the right investment property.
The good news is that property is still one of the best performing asset classes, but how can you ensure your investment performs?
Swap your Easter egg hunt for a property hunt this weekend and keep in mind the following tips:
Location
There are certain areas in the UK that can generate higher rental yields than others, but that should not be the only basis on which you decide where to invest. Great investment areas are not necessarily the most expensive, or the cheapest.
Investing near to where you live can often be easier and minimise market research time. After all, you know the area and the local amenities and it will be easier to manage.
There will be attractive buy-to-let investment opportunities in most areas and micro-markets within them - right down to certain roads - so keep your search local in the first instance.
Demand
It's crucial to have a target tenant in mind and understand the demand in the area before purchasing a buy-to-let property. You wouldn't want to invest in student houses if there isn't a university to be seen for miles!
Look at the types of properties already available for rent and ask your local estate agents.
When you've decided on a tenant type, you need to think about their wants and needs when house hunting. Take your own feelings and emotions out of the decision-making process and look for properties that they would like to live in and can afford.
Would your tenant benefit from a garden, would they prefer to be close to transport links and is parking a must? All relevant questions to ask yourself.
Running costs
There are several standard costs that all landlords will need to pay when purchasing a property, just like an owner-occupier would. However, there are also many ongoing costs that should be considered when thinking about which buy-to-let property to buy.
Some properties will be subject to ground rent, service charges and maintenance costs from leasehold and management companies or local authorities. These are the responsibility of the landlord and can sometimes be significant, and not easily recouped through rent, so make sure you are aware of them.
It is also the responsibility of the landlord to pay for initial and ongoing safety checks and repairs to ensure the property is in good working order throughout the term of the tenancy agreement.
If you decide to include bills in your rent, then you'll want to find out how much the property costs to run in terms of gas, electric, water rates and council tax and so on.
Buildings insurance is also essential for landlords unless you're happy to take a huge risk. You'll need contents cover too if you're furnishing the property. Some mortgage companies will state this as a mandatory requirement in the terms of your loan.
Also check whether your property will require planning and/or licensing approval and if landlords in your area are required to have a licence to operate as a landlord.
State of property
In today's market, it can be financially rewarding to purchase a run-down property and refurbish it before renting it out. You can not only try to purchase the property for a discounted price, but also significantly increase the value.
However, older properties can often be more expensive to maintain and you'd need to think about the heating systems and energy efficiency - especially as all rental properties will legally require an energy rating of Band E or higher from April 2018.
If you decide to go for an older property that needs only decorative improvements, then be mindful that there may be other repairs needed in time.
On the other hand, there may be fewer up-front costs if you purchase a new-build or recently renovated property that is ready to rent.
So the age, size and state of the properties you look at are important factors.
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Taking all of the above into account when buy-to-let house hunting should help considerably with your final decision. But before putting in that offer, make sure you do the maths. Almost one in eight landlords do not take any costs into consideration when calculating the financial performance of their buy-to-let investment - don't be one of these.
