There has been a great growth in the number of private landlords in the last ten years. Many investors have come into the business with no experience, hoping to make lots of money. Some have succeeded but many have been unsuccessful and lost their savings as a result. How can you steer clear of the dangers of the buy to let market?
Firstly, try to buy in an area you know. If you live in south London it makes sense to start looking for investment properties in south London. You’ll know the good areas and the bad ones, you’ll be able to check out the transport links and the local amenities and you’ll be able to reach your investment property quickly if something goes wrong.
When you are renting out your house to strangers you need to ensure that you make a very clear list of what your property contains. You of course want to avoid any difficulties or disagreements at the end of the tenancy so it’s vital to make a list of all the items and furnishings that are in your home. This is called an inventory. It’s an essential part of your toolkit as a buy to let landlord and it’s something that you cannot do without if you are planning to rent your property.
Essentially an inventory is a list of all the things in your home, along with a detailed description and a comment on the condition of that item. For many landlords this will be a short list, but of you are renting the house in a furnished state you may need to document many different items and you may need to take photos of the higher value items for Insurance purposes.
Once the inventory record has been finished it needs to be signed and dated by the landlord and the tenant and stored in trust with the tenant’s deposit. It’s vital that this is done accurately as it will provide the legal basis for any compensation claims you may make in the future.
If you can’t buy in an area you know then ensure you do your research. Local newspapers and estate agents are a great place to begin to look for information. Ensure you check the prices carefully and monitor to see how long it takes for properties to sell. You will need to know for certain what rental income you can achieve before you commit to anything because if the sums don’t add up you will end up losing money.
Finally, plenty of investors have lost out because they didn’t have the right type of buy to let insurance. It’s crucial that you get the right cover as, if anything goes wrong, you need to be sure that your investment is protected. Some insurance policies are marketed as Landlords insurance policies, but they are the same thing. A good policy will provide you with all the usual buildings and contents cover and also cover you for things like loss of rent and legal expenses. It costs a little extra but in the long run it could save you a lot of money.

Doug Walker Dip CII is General Manager of Academy Insurance Services Ltd. Academy is an independent insurance broker specialising in niche insurance markets such as blocks of flats insurance and buy to let property insurance.