Rental yields have risen to their highest level since 2018, with three consecutive quarters of growth taking the UK average to 6.1%, according to a new survey of landlords by Paragon Bank.
It’s great to see national data reflecting the rental market in your area, where the massive demand from tenants continually makes buy-to-let a lucrative investment choice.
If you’re wondering about becoming a landlord or looking to expand your portfolio, the keys to success lay in buying well for your target market and honing your knowledge in areas like:
- Shaping your selection process.
- Renting to singles.
- Renting to couples.
- Renting to sharers.
- Renting to families.
So, that’s what we’re exploring in this week’s blog, with our essential toolkit for choosing the perfect buy-to-let property, time and time again.
SHAPING YOUR SELECTION PROCESS
Whatever type of rental property you’re looking for, and whoever you want to attract as a tenant, there are some golden rules to follow for low-maintenance, long-term lettings.
- Remember that a great location for sharers may not work as well for families, so do the research to ensure the property you buy is a first-rate fit with your target market.
- Remove annoyances like inadequate storage and dribbling showers, and use timeless, high-quality fittings. Fads date fast, and being cheap always comes back to haunt you.
- Respond to the desires of tenants to live in an area that feels safe, in a home with good natural light, and where the landlord is clearly on top of maintenance and repairs.
Finally, think about future Net-Zero legislation. If you’re considering buying a property with a low EPC rating, the price should reflect any later costs of upgrading its energy efficiency.
RENTING TO SINGLES
Single tenants who rent an entire home to live in alone are choosing the most expensive lifestyle option, which means they’re often high earners.
Reaching a certain income level comes with the ability to pay for some extra style and comfort to reward all that hard work, so think about the following when considering what to buy:
- Stylish, space-efficient and well-equipped one-bedroom homes that are easy to clean and keep tidy are the perfect match.
- Studio apartments can produce higher yields, but they can often have a higher turnover of tenants as people get tired of sleeping in the living room.
- Single people often appreciate extra facilities like a resident’s gym, concierge, communal garden, convenience store, and perhaps even parking if there’s no nearby transport.
Useful amenities and an easy lifestyle are the magnetic qualities that single tenants prize. They can put your property ahead of the market, and boost your yield with a premium rent.
RENTING TO COUPLES
A natural step for tenants after renting on their own is to move in with a partner, which adds a few extra requirements to accommodate a household of two people, including:
- While you’ll get away with a small double bedroom for a single person, a couple will need sufficient storage for two lots of clothing and personal belongings.
- Two people eat double the food, so the kitchen needs enough cupboard space. Meals together also become a thing, so having a place for a table is a major plus point.
- ‘Spare’ single bedrooms are popular for having a workspace at home, a guest bedroom, and a nursery later on to postpone the need to move if a baby comes along.
Paying attention to these areas and looking to the future makes it easier for couples to keep renting your property for longer, even when they become a small family.
RENTING TO SHARERS
There are two ways to rent to sharers: a single household with everyone on a single tenancy agreement, or a House in Multiple Occupation (HMO) with separate contracts for each room.
There are licensing and room-size rules for HMOs that can change across local authorities, but there are also some universal guidelines for minimising tenant turnover.
- Stick to double bedrooms with enough space for a bed, wardrobe, and chest of drawers or desk where a tenant can stay comfortably for a long time.
- Kitchens need plenty of cupboard space to accommodate multiple people, an extra-large fridge, and enough space for a table where everyone can eat together.
- Look for homes with a bathroom for every 2-3 tenants. The law states 4, but bathroom battles will follow, leading to domestic dissatisfaction and regularly replacing tenants.
Our previous blog on Renting to Sharers goes into much more detail, so if that’s your target market, head over there to get the full picture and tons more tips.
RENTING TO FAMILIES
Families really don’t like moving home because of all the extra organisation and upheaval involved with children, so they can make reassuringly stable and long-term tenants.
You can facilitate that by keeping the following in mind:
- Families prioritise education over everything else when it comes to location, and choosing a property in the catchment zone of a good school will serve you well.
- Go for durable and repairable finishes rather than delicate designer ones: natural wood beats glossy veneer in the rough and tumble of family life.
- Seek out homes with a lawned garden for running around and falling over in safety, somewhere to store bikes, and parking for at least one car (even if it’s on the street).
For more on renting to families, click here to read our previous article and discover the ins and outs of offering a home that’s perfect for adults and children.
Will you be choosing a buy-to-let soon?
Then let’s have a chat about the rental market in your area and which types of property have the highest demand and will give you the best long-term investment.
Call Richard Cook on 0790 909 3141 or email him at richard.cook@fifeproperties.co.uk for a chat. Our expert team is here to help you build a brilliant buy-to-let business for a solid financial future.
