So let’s start with the easier part of the question and look at when is the best time of the year to buy an investment property.

The first rule is to avoid buying at peak seasons:

The British property market follows a clear seasonal cycle. Most people who are looking to buy start looking early in the year with the market heating up from February and March through to the early part of summer. By the time school holidays arrive in late July and early August the property market goes completely quiet as buyers head off on holiday. It then revives a bit in October for a few months before going completely quiet in December.

If you are a seller, you want maximum exposure so would do well to put a property on the market in February or March. On the other hand as a buyer you want to have the least competition possible. That means looking for bargains at times that others are on holiday. The time to find real bargains can often be in December, when only the most determined sellers are still in the market. With little competition out there it is often possible to get away with cheeky offers and buy properties on really attractive rental yields.

Avoid buying during property booms

The second rule to follow is to try to avoid buying during a property boom. When house prices are rising across the board, then first-time buyers are desperate to get into the market and push valuations through the roof. For them, the question is not one of value but of getting a foot on the property ladder before prices run away from them. At the same time, there will be less demand for rental property as renters try to move into their own homes. That can depress rents and make yields even less attractive.

When property prices are falling, on the other hand, you have first-time buyers sitting on the sidelines. They don’t want to buy today if they think that prices will be lower in six months or a year. The same is true for professional investors and you don’t want to be buying too soon in the downturn. But a good time to think about buying is when prices have already fallen significantly from their peaks (I’m talking about 30% or 35%) and when lots of first-time buyers are sitting out the market. At a time like this there is less risk of being outbid or of being gazumped on an offer. At the same time, demand for rental properties often goes up in a downturn as buyers decide to rent instead of buying. This can help push up rents and yields and makes some properties look like real bargains on really attractive yields.

It is worth remembering the essential rules of buy to let investing (don’t use too much leverage, make sure your yield easily covers your mortgage payments and make sure you have a margin of safety in your calculations) and be ready to hold onto properties for the long run. Properties bought in a housing market slump can often offer the best returns, but you have to be prepared to see capital values fall and stay depressed for a long time before you make your return. So long as you are investing with a clear cash flow in mind, that should not bother you. But it requires tougher nerves to buy in a downturn when everyone else thinks prices will keep falling than it does in a boom, when if feels like you can do no wrong.

A shortage of student accommodation is driving up rents

More than a year ago I wrote about how buy to let investors should consider student lets because of the higher yields on offer. This advice is now going ever more mainstream with the Financial Times and other reputable papers talking about the many advantages of investing in student accommodation. In light of this I thought I’d revisit the subject with the latest updates and market news. But first, a quick backgrounder to the subject.

Why is student accommodation an attractive investment?

The main reason is that it continues to offer higher yields than most other sorts of buy to let investments. Yields of about 6% are not at all uncommon in this market mainly because it has been ignored by the mainstream of property investors for some years now. The reason (and I’ll go into this in more detail below) is that there is high turnover among students and high rental voids, with properties often standing empty over the summer months. That adds to costs and having to find new tenants every year is a real hassle. Fortunately, because most landlords have not been bothered, yields have climbed enough to compensate investors for their trouble.

Are the big players interested?

They are. Some big hedge funds and property investors have recently started making really big bets on student accommodation. Oaktree Capital Management has said it plans to invest £1 billion in this market through Knightsbridge Student Housing. Other big institutions have also been sniffing around in UK residential property with student housing getting a lot of attention. I would expect more of this over the coming year or two as big fund managers look for alternative investments that generate good yields with lower risk and volatility than stock markets.

Rental Yields are High

A comprehensive report by Knight Frank, an estate agency, in which it looked at more than 20,000 student lets across the country, found that rental yields on student accommodation in London were 6.38% in 2010 (from 6% the year before) and in the main regional markets were as high as 6.75% (from 6.5% a year earlier).

Student Rents are Rising

Student rents in most parts of the country have been rising quite steadily. In 2010 they fell back a bit in London, but rose by 4-5% elsewhere and Knight Frank forecasts another rising this year in London and elsewhere. This comes after average rental increases of 5% a year over the 5 years to 2010.

Demand is High and growing

The student population has grown at a huge pace over the past few years, mainly as a result of the government trying to encourage more people to go to university. This has led to a huge shortage of space in many university towns.

But there is a risk that demand could be squeezed. The government is allowing universities to bump up fees this year and that may cut the numbers of new students going into the system. It may also push large numbers to stay at home with mum and dad to cut costs rather than to go to a university in another town. Even so, Savills, another property agency, said it expects a shortfall of more than 22,000 beds in student housing over the next five years (it said this in a 2010 report that you can down from their site – registration required)

Their main conclusion is that:

“Purpose-built student housing completions are expected to remain lower than the annual increase in new additional students.”

What are the most attractive towns for investing in student housing?

The market for student housing is basically divided into 2 parts. One is London, where there are more than 40 universities and tens of thousands of students from within the country as well as foreign students. The other is the cluster of regional towns including Oxford and Cambridge, where the towns are much smaller in relation to the universities and flows of students dominate much of the demand.

Knight Frank lists the following towns in order of attractiveness based on the number of universities, growth in student population, supply and demand and a few other ranking factors. In the order of most attractive, the top five it lists are:

1. London
2. Kingston
3. Brighton
4. Edinburgh
5. Oxford

What is the most attractive sector?

Knight Frank thinks that the biggest area of undersupply at the moment in London is for what it calls “value accommodation” in the price bracket of £15-200 per week. In the regions away from London there is more demand for higher-end accommodation that couples, mature students or post-graduate students might want.

What do Student Flats Cost and how much is the rent?

Small studio flats (not purpose-built dormitories or single rooms in bigger houses) vary considerably depending on the area. A city centre flat in Bristol might cost £150,000 or so, whereas in Edinburgh a similar property might cost £177,000. Typical student rents in these areas might be in the range of £650 -£ 750 a month, according to an article in the Financial Times (registration required).

Average rents per week for a studio flat, according to Knight Frank, are (for 2011)

• London – £275
• Regional Towns – £136
• England and Wales – £178

What are the disadvantages of investing in student housing?

The first is mainly because of the risk of damage to property. Students often know they will only be in a place for a year and may throw some wild parties. Many students will also smoke (all kinds of things, legal and not). That said, the perception is generally far worse than the reality and most students are mature and sensible. Many will also be post-graduates in their mid 20s and are likely to show respect for a property.

The second concern is about turnover. If you have to find new tenants each year it adds to your administrative burden as well as costs since it is sensible to run proper tenant checks and credit checks on all of them. Some of this work can be done by a letting agent, but you would still need to check and satisfy yourself that it has been done property.

There are some ways of cutting costs on this. You could cut out the letting agent entirely (saving you some 7-10% of the gross rent that you would collect) and advertise yourself. A good place to start would be with accommodation officers at the universities.

Managing the risk of student lets

Students are generally not likely to have enough income or a decent credit record to stand as tenants on their own. It is thus often essential that you get their parents to sign as guarantors. This means that the parents guarantee that the rent is paid in full. If you do this you should also do a full tenant check and credit score on the parents. Ideally you want to find parents who own their own home. This means you have a fixed address in case things turn ugly and you have to send the bailiffs with an order for payment.

Actively try to let to older students or post graduates as they are more likely to be more responsible.

What else to look out for

When you get landlords insurance double check the terms and conditions very carefully as some policies exclude students. You may also struggle to get rent guarantee insurance for a student let, especially if you haven’t got the parents to be signing on as guarantors. In that case you might want to ask for a slightly larger deposit.

You may also struggle to find a mortgage lender willing to finance a buy to let investment in student accommodation as not all agree to this.

A good agent can mean the difference between finding great tenants or deadbeats

When you’re involved in buy to let investing, every penny that you spend or save can mean the difference between making a profit or a loss. So a common question that many landlords ask is “do I need a letting agent?” given that they typically charge 8% or so of the annual rental (usually one month’s rent) for finding you a tenant.

The cost is a considerable one, especially since many letting agents charge a similar (or slightly reduced) fee when the tenants renew. A half a day’s work by an agent can result in a landlord paying out for years and years.

Before deciding whether to employ a letting agent or not you should be aware of the pros and cons of letting agents.

What does a letting agent do?

The main role of a letting agent is to find you suitable tenants for your property. Typically letting agents will have a high street presence in the area, usually near to a tube station or bus stop since tenants often start their search for a new home by visiting the first letting agent they see.

A letting agency will also often have their own web site and will advertise a property on national websites such as rightmove.co.uk or pirmelocation.com.  This broadens the range of potential tenants that you can compared with placing adverts of your own or by posting on websites such as gumtree.com or craiglist.co.uk.

The agent will also do a preliminary screening of tenants for you and will exclude those who clearly cannot afford the property or seem unsuitable. Their experience can also be really helpful as they may pick up potential problems that wouldn’t occur to a new landlord.

The next job that the agent should do is take references and do a credit check on the tenants.  This is usually done through an agency such as Homelet, which will independently check for County Court Judgements (CCJs) against the tenants at their previous address as well as look for any other black marks on their credit record. They should also call the listed employer to check that the tenant is indeed employed where they say they are and at their stated income.

Once this is done the agent should also be able to offer you rental guarantee insurance (and other sorts of landlord’s insurance such as legal cost insurance). Just remember that these insurance policies are not all equal and that some of the cheapest (usually the ones that are thrown in for “free” by letting agents) will only provided quite limited cover. Do your homework on this.

Leases and deposits

Most letting agents also take care of the basic paperwork for you. They will have a standard assured shorthold tenancy agreement that they will ask you and the tenant to sign and they will often arrange to collect the deposit and put it into one of the deposit protection schemes such as mydeposits.co.uk or the Tenancy Deposit Scheme which can be found at www.thedisputeservice.co.uk.

Inventory

The agent should also ensure that they have a proper inventory taken at the start of the tenancy. This is essential as it will form a key part of the evidence you need if you later have a dispute with tenants in the event that they have damaged the property or furnishings.

How to choose a letting agent

If you decide to use a letting agent you should be sure you put time and research into choosing the right one.  The first thing you should do is to check with they are registered with ARLA (the association of residential letting agents). This is because ARLA has a code of conduct and a dispute resolution service that you can complain to if you feel your agent has done something wrong or treated you unfairly.

You should also take time to check the reputation of the agent in the area. An agent with a bad reputation among tenants won’t be able to attract the best of them. The last thing you should be sure of is to meet with them and satisfy yourself that they aren’t just going to try to sign up the first tenant who comes along. Some agents are just chasing their commission and may be under huge pressure to meet targets so will not turn down unsuitable tenants. What you want is an agent who will see your relationship as a long-term partnership.

Can I do it myself

The steps I’ve outlined above are all well within the ability of the average person. There is no reason for you not to place your own listings online and to screen tenants yourself. The selection you will get will probably be more limited and you may not be able to command as high a rent, but this may well outweigh the costs of paying some 8% or so to an agent.

 What is an assured shorthold tenancy?

Most new tenancies that buy-to-let landlords have to deal with these days are what are known as assured shorthold tenancies (AST). These first came into force in 1980 but became really widespread in January 1989 when they became the dominant form of new agreement.

The big thing to remember about a tenancy agreement is that it has two elements. One element is that it is a contract between a landlord and tenant. Under this part of the tenancy, you set down the amount of rent that a tenant has to pay as well as many of the other rights and obligations between the two.

 A tenancy is a bit like marriage

The second part of a tenancy is the part where the government gets involved. In this, entering a tenancy is a bit like getting married. By this I mean that when you enter into a tenancy you give up some rights over the property. You lose the right to simply march into whenever you want to. You lose the right to change the locks or kick someone out. And like a marriage, sometimes the only way you can end it is by going to court. Even if a tenant is in breach of the agreement, they have rights under law that allow them to keep occupying the property until such time as a bailiff knocks on the door. Remember this because you should always keep this in mind when entering a tenancy.

Do I need a tenancy agreement?

Strictly speaking you can find yourself in a tenancy agreement with nothing in writing. A verbal agreement is strong enough to establish a tenancy. As a landlord this is not an ideal situation at all because if you allow someone into a property and start collecting rent from them, you are granting them all sorts of rights over the property without you having secured your rights. So always make sure you have a signed agreement before you hand over the keys.

Among other things that can happen if you do this, according to landlordlaw.co.uk (I highly recommend you go to this site) is that your tenants can paint all the walls black and change the locks.

What should a tenancy agreement contain?

According to the government, the basic elements of a tenancy agreement should include.

• the names of all people involved
• the rental price
• the deposit amount and how it will be protected
• the property address
• the start and end date of the tenancy
• any tenant or landlord obligations
• which bills the tenant is responsible for

You could also include information on:

• how to pay rent
• whether the tenancy can be ended early and how this can be done
• who is responsible for minor repairs
• whether the property can be let to someone else (sublet) or have lodgers

In addition the contract that a landlord draws up must have the following characteristics:

• be fair
• not go against legal landlord duties
• is balanced between the two parties
• must cover rent payment
• must cover deposits

 What else should an agreement contain?

The additional clauses that you want in a tenancy agreement are all about trying to protect your rights.

• You want to ensure that you have the right to inspect the property after giving due notice (usually 24 hours) and that the tenant should not unreasonably refuse this.
• Set out terms on what the tenant can do with the property (ie, they may not change the locks, should move furniture back to where they found it and should not do major redecoration without your permission).
• You should also state that your tenants do not have the right to sublet the property. The last thing you want is to find that someone else is living in your property and you have no idea who they are.
• You must include an address (yours or a managing agent) in England for the service of notices. Normally you would do this in the agreement but if you have forgotten then you can send a notice to your tenant giving them your address. If you don’t provide your address and then subsequently try to regain possession of the property for rent arrears, the tenant will be able to successfully defend themselves in court against your claim.

 What can’t I put in a tenancy agreement?

According to the Office for Fair Trading (OFT) tenancy agreements are not allowed to contain unfair terms and conditions.

If unfair conditions are included in the contract, they may be unenforceable? Examples of this include trying to get tenants to agree to pay disproportionately high compensation (fines in other words) if they fall behind in rent or breach the contract in some other way. On the other hand you can claim reasonable expenses, for instance a few pounds to send a reminder notice for late rent, as long as these are reasonable and fair.

How long is the minimum tenancy?

By law you can draw up a contract that is for any length of time that you like, and if you and the tenant agree then all is dandy. The problem is that by law, tenants do not have to leave a property within the first six months, so if you agree to a shorter-term tenancy of say 1 or 2 months and your tenant changes their mind, then as long as they are paying their rent and doing what they are supposed to do, you can’t kick them out within six months.

Where can I get a tenancy agreement?

There are a variety of places where you can find a tenancy agreement.

• You can either use pre-printed ones that you can buy from a stationary store such as WH Smith. These usually cost about £10 each. You can also download an agreement from a landlord’s site such as the LRA, PropertyHawk or LandlordLaw. In these cases you need to be members of the associations or sites in order to get the downloads.
• These are usually a step up from the basic preprinted ones as they allow you to customise the agreement.
• You can also find free ones, but these are not always advisable as they may not be up to date or properly drafted by a solicitor.

Further resources:

http://www.rla.org.uk/landlord/documents/tenancy_agreement/doc_AST.shtml?ref=assured_shorthold_tenancy_agreement&gclid=CJ61iPy246oCFdFc4Qodux-i8w

http://www.direct.gov.uk/en/HomeAndCommunity/Privaterenting/index.htm

A good starting point is to make sure you have the right buy to let advice. You may, however, have to go to a number of different sources to get it. Also remember, that everyone who is talking to you will be pushing their own view for a reason. That said, if you gather enough information from a variety of sources you should be in luck.

1. The very best source of information on market conditions in a particular area will be the local estate agents and letting agents (or managing agents). In my case I’ve found that when you approach them saying you have a property to let (even if you don’t) they will give you an honest assessment of the likely rent that it could get. They have no real interest in overselling the likely rate in the hope that you will give them business because they may not be able to deliver on it.
2. The Association of Residential Letting Agents (ARLA) has some good -how-to-buy-to-let guides that give a pretty good overview of the legal situation.
3. Direct.gov has a section telling you what your obligations are as a landlord. This spells out, for instance, what you have to do in terms of getting energy certificates. It also has a good section explaining the different sorts of tenancy agreement and tenancy deposit schemes. Click here to go directly to the section on renting out your home.
4. The department of Communities and Local government has a really useful pamphlet no renting out your home that you can download. It covers questions such as 1)what is the law, 2)How long does an assured shorthold tenancyhave to last? 3)How would I get my property back? and so on. These are really useful and this gives a great guide to buy to let for beginners.
5. Mortgage brokers suchas Charcol can be useful sources of buy to let mortgage advice adn they also have a list of the best mortgage rates.
6. There is some very good stuff on the Landlord Law Blog, that talks about issues around tenancy contracts, evictions and the like

There are a number of other great places to get buy to let advice and I’ll be adding links as I go along here. If you have any suggestions please feel free to contact me or post it in the comments section below.

One of the first things that you need to have to get a low mortgage interest rate is a big deposit.

The more money that you can put down, the safer you’ll seem to the bank. The reason for this is that the bank wants to be sure it has a good chance of getting its money back if you ever default. The more you put down, the bigger the bank’s of safety margin. So to get a good rate you really need to think about trying to put down at least 30%, possibly even 40% of the value of the property. Most big mortgage banks reserve their best buy to let mortgages for their best customers and will offer far better rates if you’re able to put down that sort of deposit than if you only have 10% or 20% to put down.
The second factor you want to consider is your own credit history. Your credit score is an important factor in determining interest rate you will pay for your mortgage. Banks will look at it to decide whether you’re a good risk, or a bad risk. If they think you’re a bad risk they may not give you a mortgage at all.
And even if you have only a few black marks against your name on your credit record, the bank may only give you a mortgage at a higher rate. Credit checks are quick and easy (I’ll tell you how to do them cheaply below) so there is no excuse for not doing one.

A fair number of people have got bad credit scores because of a mistake by the rating agency. They may have moved into a property that was inhabited by people with a bad credit score and have had their records tarnished by the previous tenants. Or they may have a family member or spouse or even someone with the same name has not related to them with a bad credit record. It is not uncommon in these circumstances for the credit records to get confused and the innocent get tarred with the brush of those with bad scores. If that is the case you really want to clear that up and get your credit record cleaned before you apply for a mortgage.

It is easy and cheap to do this in Britain.

By law rating agencies have to give you a copy of their records for free although they are allowed to charge a nominal fee for postage. If you write to any of the big credit rating agencies such as Experian or Equifax, they will send you a basic report. This report will allow you to find out whether there are any errors or other issues such as bills that have been repaid but that have still been reported as unpaid. If you discover errors, then you have the right to have these corrected. You can do this by writing back to the credit rating agency with details explaining why you think they’ve made the error, and by law they have to fix it if they are wrong.

You can also get a more advanced online credit report from these companies. Many of them will give you details and instructions on your credit score, and steps that you can take to improve your credit score. The great thing about many of the services is that they are often free for the first month. You can sign up for a month, get the credit report, and then unsubscribe. That should give you a lot of information at no real cost.

This sort of service is also very useful if you have genuine problems on your credit record and want to learn how to correct them. If you genuinely have had problems making payments and have defaulted on credit card bills have been late paying other bills such as utilities, then there is little you can do to immediately improve your credit score. But taking the right steps early can help you improve you credit score more quickly. For instance, your credit score will improve the longer you stay at the same address. And, after a few years bad marks are meant to be expunged from your record. So even if you have a bad credit score, if you start taking action now you can improve it. That becomes your first step to getting the best buy to let rates on your mortgage.

First for the bad news:

Property transactions are expensive

Buying a property can mean entailing some significant costs. You may have to pay stamp duty on the transaction. You will have to pay solicitors. You will end up paying a mortgage fee and often a valuation fee as well. Then you will probably want a full survey conducted. All of these costs add up pretty quickly and can soon reach well into the tens of thousands of pounds on a valuable property. Trying to skimp on many of them would just be a false economy as you don’t want to get the cheapest survey possible only to discover that important structural defects were overlooked.

Property renovations take more time and money than budgeted

There is a sad and unfortunate truth about builders, plumbers and other sorts of trades. In general (and I’m sure with exceptions) these are people who are juggling a lot of jobs and end up trying to do them all at once. This means that appointments are frequently forgotten, deadlines slip and costs can overrun budget. I don’t know why this is the case but I have worked with many and it has always been the case. You me be really lucky in finding people who are super-reliable. Or if you can offer them a lot of work because you have a portfolio of properties and they want you as a repeat customer, you may find them more reliable. But for most people, you will have to assume that building work will take a lot longer than expected.
Building work also generally costs more than expected. This is partly because of the time factor, but also because unexpected problems crop up. You may want someone to simply install a new combi-boiler but when they examine the gas fitting they may tell you it needs replacing. The same is true with electrical fitting and wiring and almost all other parts of a house or flat.

Property renovations are stressful

Unless you are in the trade yourself or can hire a project manager to oversee it all for you, sitting around in a half-finished empty house waiting for a roofer to arrive when he has already missed 3 appointments can be really stressful. It will also be stressful seeing the bills pile up. And if you planned to let the property, every week that it stands half-finished is a week that you aren’t collecting any rent. You need strong nerves for this kind of investing.

Have I discouraged you yet? Good. Because if you keep all of the above in mind and enter this with your eyes wide open, you will find that there are good opportunities for making money. Here are some of the issues you need to keep in mind though.

Know your target market

Each sort of target for letting will have slightly different needs and tastes when it comes to how you refurbish and decorate a house or flat. If you are planning to let to students you want something that is functional but also relatively hard wearing. Avoid carpets that will get damaged by dropped cigarettes or spilled drinks. Also avoid countertops that need special care. Students will not want to be oiling your counter for you or wiping it down if it gets wet.
If you are planning to let to city sorts or other young professionals you will need to spend more on the interior to give them a more stylish finish.
Families will want something that turns a house into a home but is also hard wearing, especially if there are children about. Don’t skimp on things such as the quality of paint. Spend a bit more and get a paint that can be washed down and cleaned properly.
In all cases you should also be sure that you are spending money to save money. Don’t get a cut-price bathroom if in doing so you end up with water leaking into the ceiling below and causing costly repairs. Also think of spending a bit more on insulation and the like as it will lead to huge savings in energy costs by your tenants. This may not benefit you directly but it could make for more loyal tenants.
Finally, remember that if you look after your tenants they are more likely to look after you and the property. If you have a house with a garden, spend a bit and make sure there is a lawnmower and the tools needed to look after the garden. That way when it comes time to find new tenants you won’t be spending a fortune on getting in a gardener to tidy everything up again.

The first point of call for beginner buy to let landlords should be the Association of Residential Letting Agents (ARLA). This is an organisation that represents the letting and management agents that you may need if you ultimately use someone to help you find tenants and to manage your property. It is a well respected organisation with a membership of more than 3500 agents around the country.

There are two reasons you might want to go and take a look at their website. The first is that they publish a quarterly survey of landlords. You can download the one for the second quarter of 2010 here:

This give an indication of returns on buy to let and property investments and is a good gauge of investor sentiment in the market because it asks questions about issues such as how many landlords are thinking of selling their properties over the next 12 months and what the Loan to Value (LTV) of property portfolios is.

The other really useful thing that ARLA publishes is a guide for buy to let landlords. This beginners guide covers most issues that people need to be familiar with such as insurance and mortgages – many of the issues that I also try to cover here. But I’m just a one-man band rather than a full organisation with thousands of members. You can check out their guide here:

Another useful source of information is Rightmove which is a website that lists properties for sale and to rent. You don’t just want to go there if you’re looking to see what’s for sale (or what rental prices are). You also want to take a look at this website for its buying guide. This is not the most comprehensive guide on buy to let out there but it does have some useful mortgage calculators and the like.

You can find it here.

To find out what your responsibilities and rights are as a landlord you can go to the government’s website on private rental property at Direct Gov.

This site is really very useful  because it explains exactly how  rental contracts work and what you have to do as a landlord when holding a deposit (something I’ve also covered in my post on the tenancy deposit scheme).

The government has also got a really useful guide to assured and assured shorthold tenancies  (the sort you will generally be involved in when letting out a buy to let property). It has sections on setting up a tenancy, what the rights and responsibilities are and what to do when a tenancy ends. You can download this guide here.

So there you have it. All the information you could possibly want on buy to let including beginners guides and legal guides. I hope this helps.

What are the advantages of managing agents for buy to let?

The biggest advantage is that it takes away much of the stress involved. A letting agent will have the job of finding tenants and ensuring that they are high quality. That will often mean checking their credit score and telephoning their references such as an employer and previous landlord. You could do these tenant checks yourself but many people don’t so it probably makes sense to pay to be sure it gets done rather than not done. Many letting agents will also offer rental guarantees as part of their service. This means that if the tenants turn out to be bad apples and don’t pay their rent, the insurance policy will kick in and cover legal costs and compensation for their rent until they have been evicted and sometimes even until new tenants have been found. The other big advantage is that they will have to deal with calls late at night if there are problems. They will often have a list of reliable tradesmen such as plumbers and electricians on hand to deal with these faults.

In many cases the quality of the work that is done will be higher than if you hired an electrician or plumber yourself. Simply put, an electrician who gets tens or even hundreds of jobs a year from a single managing agent will work hard to keep the agent happy. He will arrive on time, do the work promptly and do it properly. On the other hand, if he (or she) thinks that they will just get a single job from you to fix one problem then they may well arrive late, keep you waiting and take their time doing the job. If you think about all the times you’ve ever called a plumber who didn’t arrive. The odds are that he was working on a more important job for a managing agent so left you out to dry.

What are the disadvantages?

The biggest disadvantage is cost. Many managing agents will charge a fee of about 4% to 6% of the annual rent to look after the property for you. If you have a big mortgage this can leave you somewhat stretched, especially since the typical fee to find a tenant is about 8 percent of the annual rent. That means you could be paying as much as 15 percent of your gross income in fees before you’ve even dealt with your other major costs such as servicing your mortgage. Your maintenance costs will also be much lower if you are handy with a hammer and paintbrush and do much of the work yourself. That said, if you are calling in tradesmen to do the work for you then you may well end up paying more yourself for the job than you would if it was through a managing agent for the reasons I outlines above.

Some people may also feel a loss of control in using an agent. If you are very hands on and want to meet your tenants yourself before agreeing to anything then you should probably stay with your instincts and remain hands on. Either way you probably still want to ensure you minimise some of the risks by ensuring that you have proper landlords insurance and rental guarantee cover. Buy to let investing is uncertain enough as it is without you having to increase the risk that you take on. Using a managing agent can help you reduce some of the uncertainty, but it is certainly not the only way.