Thinking of Investing? Here is a Quick Buy-to-Let Guide

If you’re thinking about becoming a landlord, there are several important factors to understand before purchasing a property. Buying a buy-to-let property is different from buying a home for your own use, so it’s helpful to know what to expect throughout the process.

Of course, it’s a long-term investment that shouldn’t be made in haste, so if you’re reading this, you are probably looking for the right kind of information.

Our team at Giraffe Residential are experts in buy-to-let advice, so here is our guide to purchasing a buy-to-let property in the North East!

What is Buy-to-Let?

First things first, the basics: buy-to-let is a property that is specifically purchased with the intention of renting it out. It’s an investment property that can generate a monthly income, as long as the rent being charged is higher than the monthly buy-to-let mortgage payments. 

A buy-to-let mortgage is different to a residential mortgage, and if you can’t afford to simply buy the property outright, you will need to apply for one.

When applying for a standard mortgage, your income is taken into consideration, whereas with a buy-to-let loan, the lender considers the potential rental income as your primary income source, and considers your personal income as secondary. The interest rates tend to be lower, but they have larger upfront fees, so keep that in mind.

Moreover, deposits on buy-to-let mortgages are also typically larger than the deposit needed for a standard mortgage, so expect to put down at least 25%. 

Flats, Houses, or HMOs? Finding the Right Buy-to-Let for You

Choosing the right property is crucial and should take into account factors like proximity to amenities, transport links, the neighbourhood, and local demand. Just as you would when buying a home for yourself, thorough research into the area is essential when selecting a location for your buy-to-let investment.

Think about the type of tenant you want to attract and tailor your search accordingly. For instance, if you're targeting families, properties near good local schools are ideal. If students are your intended market, being close to a university is key.

Keep in mind that your choice of tenants can also impact your mortgage options, as some lenders place restrictions on certain tenant types—such as student lets.

Do you need buy-to-let insurance? 

The short answer is yes; you should have buy-to-let insurance (also known as landlord insurance). It gives you coverage for the building and the contents inside, and any landlord liabilities. 

Building insurance is often required by your mortgage lender in order to secure a loan and will compensate you if your property is destroyed or damaged. This will cover the repairs or rebuilding costs, so you don’t have to pay huge expenses out of your own pocket. 

Contents insurance will cover any furniture inside the property. It’s a smart idea to get contents insurance even if your buy-to-let property is unfurnished because you can choose what level of cover you require, and it can protect any curtains, carpets, and other furnishings that essentially come with your property between tenants.

If you choose to rent your property unfurnished or furnished, your tenants will be responsible for their own contents insurance for personal belongings when they move in. 

Do you need to use a letting agent?

If you prefer a hands-off approach to managing your buy-to-let property, working with a professional and experienced letting agency is a smart move. It’s important to consider how much time you can commit and how involved you want to be in the day-to-day running of the property.

Letting agents like Giraffe Residential can handle essential tasks such as conducting tenant credit checks, preparing tenancy agreements, chasing late rent payments, coordinating property maintenance, and ensuring compliance with mandatory gas and energy safety checks.

Letting agent fees typically include an ongoing management charge, which can vary—so it’s always best to speak directly with your chosen agent for a clear breakdown of costs.

Overall, using a letting agent can significantly ease the pressure, especially if you're a first-time or busy landlord.

For professional advice on purchasing a buy-to-let property in the North East, contact our expert team at Giraffe Residential on 01912760550 or email hello@girafferesidential.com. We work closely with clients on property sourcing, helping you find your next ideal investment with confidence and ease!