How quickly will you start receiving rent?

When you first buy a rental property, you need to factor in that you won’t get the keys and instantly start receiving rent (unless you buy with tenants in-situ).

It is likely that you’ll first need to undertake some maintenance or refurbishment to the property. You will also need time to advertise the property, conduct viewings, reference the chosen tenants and complete all of the relevant paperwork and safety checks before finally moving them in and starting to receive some return on your investment.

Being pro-active can help to minimise this initial void period. I try to advertise the property as soon as I am allowed to by the seller, have confirmed the ‘earliest move-in date’ and can take representative photographs that show the property off well. 

Ideally you would conduct viewings at this stage too i.e. between exchange and completion. If that’s not possible, marketing it early still enables you to take prospective tenants names, numbers and details so that once you are in a position to conduct viewings you have a shortlist of interested parties ready to go on day one.

Letting agents or landlords with multiple properties may also have a head-start as they will often have tenants on a waiting list or who ‘missed out’ on a previous property but may find yours of interest.

It is also important to advertise the property at the correct rental price. You may even consider offering the property below the ‘going rate’ so as to attract more interest, rent the property quicker and thus minimise your initial void period on your first let (when the property is earning you nothing). 

Ideally the first batch of viewings will lead to suitable tenants who wish to rent the property. The next issue then becomes when they can move-in. It’s unusual for someone to be able to move-in immediately, as they will typically have a notice period to honour with their current landlord.

Property type can play a part here - smaller properties may be filled quicker as the tenants are naturally of a more transient nature, whereas larger family homes often come with tenants that have more commitments (and stuff to pack!) before they can move.

 In normal circumstances, if a property is advertised and a tenant is not found within a couple of weeks (not necessarily moved in, but scheduled to do so)  then I would say something is wrong - normally the price, property or marketing. One key proviso for a landlord is that the objective should always be to get the best tenants possible, not necessarily the first ones that come along. 

If you are buying a rental property and would like someone to help you find the right tenants as quickly as possible, please get in touch.

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How much are Chichester’s landlords spending on property maintenance?

As another tax year recently came to a close, annual account statements were sent out to all of my landlords who use my fully managed service. It’s something I include (free of charge) as part of my lettings service, but I think it will make my landlords (or their accountants!) lives easier come self-assessment time.

The statement breaks down the total rent they have received in the tax year for each property, along with any deductions that were made i.e. CRJ Lettings’ management fees and any maintenance costs. It’s similar to what they receive each month when the rent comes in, but this time for the whole tax year.

Not only is this a nice overview for the landlord, whilst again demonstrating my complete transparency in regards to fees, but it also ensures all costs are accounted for so that they can claim the maximum tax relief. This is increasingly important when the deduction of mortgage interest has been taken away, having been replaced by a (often lesser) ‘tax credit’.

It also gives me some great figures to analyse, which I wanted to share with you.

The average rent my landlords are achieving is £1,228pcm, which means the bulk of my managed properties are slightly cheaper than the current average rental property available in Chichester (which costs £1,300pcm). More telling is the fact my landlords have received all of the rent due to them. Each year I question whether I will repeat this achievement, such is the economic landscape and frequent tales in the press of non-paying tenants. 

What’s more is that my unique fixed-fee structure is proving to be excellent value for my landlords; demonstrated by an average charge of just 8.5% for an award-winning full management service. One landlord is paying just 5.8% as their property achieves a particularly high rent, meaning my fixed fee proves to be even better value for them.

What is also interesting to see is that my landlords are spending an average of just £361 a year on property maintenance, which is only 2.5% of the total rent they receive. Common lettings advice is to set aside 10% of your annual rent to account for property maintenance, so it seems my landlords are doing far better than this. 

I suspect this is partly because I tend to manage more modern properties, which should inherently have fewer issues, but also because I tend to endorse the attitude of ‘prevention being better than cure’ i.e. spending a little in the short-term to save a lot in the long-term.

I hope it’s also partly down to the carefully selected maintenance contractors I use, who offer reasonable value for money, plus the fact I don’t add a mark-up to maintenance costs or charge additional commission on such works. I’ll also typically run through a few simple steps with tenants when issues do occur, in case we can resolve them without the need for paid help.

Landlords; let me know how much you’re spending on maintenance and where you’re spending it (boiler repairs and faulty toilet flushes made up a good chunk of our maintenance spend this year!). And if you’d like to discuss the ins and outs of how I can make the management of your rental property a little bit easier and perhaps more cost-effective, please get in touch.

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Avoid having your house ‘stolen’

Scammers are getting increasingly sophisticated and property is an area they target due to the high transactional values. You may be aware of ‘phishing’ attacks, whereby fraudsters impersonate your solicitor to try and intercept the transfer of funds into their own pockets, but have you heard about the tricksters who attempt to impersonate you so as to steal your property!?

The theft occurs with the criminal impersonating the owner of a property so that they can then sell or re-mortgage it. Buy-to-let properties without a mortgage are a prime target here, as the owner won’t live at the property and there isn’t a mortgage company double-checking things or receiving any of the sale proceeds.

As title deeds are a publicly available document (they cost £7 to download online), it is very easy for anyone to get the name of the owner of a property. The title deed will also show whether there is a ‘charge’ against the property i.e. a mortgage. With this information the fraudster, who often first poses as a tenant, will simply change their name by deed poll to match the property owner’s name. Now living at the property with the same name as the true owner, it becomes very easy to build up identification documents and paperwork that would see that person passed off as the ‘owner’.

That’s exactly what happened to a property in Luton in 2021, with a fraudulent tenant selling the property without the landlord even knowing! Unfortunately, this is not an isolated incident, with the Land Registry paying out millions in compensation each year due to fraudulent transactions. Another case saw a previously unencumbered property in London become subject to a £1.2million bridging loan, which was paid out to a mother and daughter who had changed their name to match the registered owners.

Fortunately, there is a solution to this; which is to enter a restriction on your title deed. This will then state that any application to change the register must be accompanied by a solicitor’s certificate verifying your identity as that of the legal owner. This can cause a slight delay when you actually want to sell or mortgage your own property, but that’s surely better than falling victim to this crime.

Another option is to sign up to the Land Registry’s free property monitoring service. You’ll receive an email if an application is made to change the register; so, whilst it won’t prevent changes being made, at least you’ll know straight away so you can take prompt action.

As ever, prevention is better than cure. So, whilst the above is rare, it pays to be aware of such matters so you can put measures in place to ensure you are protected. Thorough tenant referencing will also put off any chancers with such misdeeds in mind, as they will seek an easier target if asked too many questions. 

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What’s for rent in Chichester?

 

Not much!!! 

Since the onset of the pandemic five years ago, the supply of rental properties in Chichester has been at record lows, whilst demand remains stubbornly strong. This has led to a hugely competitive market for wannabe tenants, whereby you can expect dozens of enquiries within 24 hours of listing a decent and well-priced property to rent. That is despite rents increasing across the board as a result of this supply and demand imbalance.

There are currently just 91 properties for rent (excluding student lets and room shares), which in a city the size of Chichester is wildly low. It is also a slight drop from the already low figure of 96 properties on the rental market a year ago. 

Even more worrying is that demand has continued to outgrow supply; with only 38 properties still available to rent (42%) compared to 53 properties that have been let agreed (58%). Bear in mind that five years ago (just before Covid struck) there were 205 properties on the rental market in Chichester, of which 143 (70%) were still available. 

Clearly then there’s not much choice for those seeking a property to rent, which explains why so many people are enquiring as soon as something comes to the market. Furthermore, it explains why people are willing to pay more as and when something suitable does become available. This has led to an increase in asking rents across the board, such that the current average asking rents in Chichester are:

 

…The average rent for a property in Chichester is currently £1,400pcm, up from £1,300pcm a year ago (an increase of 7.7%!).

The cheapest property available to rent in Chichester is a one-bedroom apartment on Chatsworth Road, which is ‘let agreed’ having been marketed for £795pcm. On the other end of the scale is a five-bedroom detached house on Old Broyle Road, which is available for £3,000pcm.

Why then has there been such a drastic decrease in the number of properties available to rent? Put simply, landlords are continuing to sell up. The stick of taxation and legislation has proven too much for some, with interest rate rises wiping out profits for those with buy-to-let mortgages. 

I’ve written many times about the negative impact taxation and legislation changes are likely to have on the rental market; not only directly for landlords, but ironically for the tenants they are supposedly meant to help. This has now come to fruition as rental supply remains at such low levels that, unsurprisingly, rents are increasing as a result. That perfect storm is making it increasingly difficult for tenants to find a decent home at an affordable price.

To stay abreast of the availability and average prices of rental properties in Chichester, be sure to subscribe to my free fortnightly e-newsletter at www.bit.ly/chipropertynews.

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What’s for sale in Chichester?

There are 862 properties listed for sale in Chichester on Rightmove currently. 570 are still available to buy, whilst the other 292 have been sold (subject to completion). However, when you start to browse through these properties, you notice there are a lot of mobile homes (that can’t be used as a permanent residence), retirement flats (that are only good for people of a certain age), shared-ownership homes (that aren’t available to everyone) and properties advertised for ‘cash buyers only’ (which won’t apply to most). When you take all of these out of the mix, you’re left with just 456 properties to choose from.

Those looking to buy a three-bedroom home have the most choice, with 175 currently for sale (mostly terraced houses). Meanwhile those at the lower-end of the market looking for a one-bedroom property have the least to choose from, with just 24 on offer (all of which are flats).

Of course, what you can buy will largely depend on your budget. The cheapest of the 456 mortgageable properties that are suitable for non-retirees, can be called your own and lived in all year round, is a one-bedroom flat above shops if The Hornet, priced at £139,000. 

At the other end of the scale, the most expensive property for sale in Chichester today (despite having had £300,000 knocked off the price since it was listed last Spring) is a five-bedroom Grade II listed home in Lions Street, priced at £2,350,000. Located in the heart of the city, the property dates back to the early 1700’s and was honoured with a Chichester Heritage Award in 2016. 

Assuming your budget is somewhere in-between those two extremes, it might be useful to know that the average property marketed for sale in Chichester is priced at £425,000, which is 8% higher than the average figure from twelve months ago (£395,000). 

Breaking the average down by property type provides a good indication of what your budget is likely to be able to afford in Chichester:

Interestingly, the average price of flats and three-bed houses have declined in the past year, whereas the other property types have risen (with two-bed houses having done so most strongly). 

This suggests it is primarily the lower end of the market that has been hit with property price drops, whereas the higher end of the market has remained resilient. This is likely because inflation and rising interest / mortgage rates are having a greater impact on the lower-income households who are further down the property ladder.

A lot has been said about a rush at the start of the year to purchase property before stamp duty increases in April. It is likely too late for most sales agreed now to get through conveyancing in time to beat the hike, so it fits that more supply is coming to and sticking on the market. It will be interesting to see whether prices are affected going forward, especially if mortgage rates do not drop as quickly as many had hoped.

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Why you should let tenants turn your house into their home

I often get asked by prospective tenants whether they’d be allowed to put pictures up on walls should they rent a property of mine. I’m amazed some landlords charge thousands in rent but won’t allow their tenants to put a few pictures up, especially when you consider it from a business perspective. 

Having such stringent rules about how a tenant can live won’t make them want to stay for long. This will naturally create a higher churn of tenants, leading to more void periods (and less rent in the landlord’s pocket). Furthermore, the coming and going of tenants will lead to greater wear and tear; which presumably is what the landlord was trying to avoid in the first place!

In my view it’s quite simple; yes, the tenant should respect the property they are renting, but for the time they are there they should see it as their home and treat it accordingly. 

If tenants want to put pictures up, they would simply be instructed to return the wall in the same condition as when they started the tenancy. That would mean filling any holes and touching them up. If the touch up doesn’t match the rest of the wall, they should paint the wall. Alternatively, I’d probably give them the advice to buy special hanging strips, which can be used to hang pictures on walls securely without making any holes!

To further protect the landlord, an inventory is created before the tenancy begins, which includes a thorough description and photos of the property’s condition (including the walls). The tenants get the opportunity to check through it, so all parties understand how things need to be returned at the end of the tenancy (less fair wear and tear).

Inspections will soon show if tenants are abusing the tolerances afforded to them, whilst a visit before their move-out with a few pointers as to what is needed to be done to get the property back to the required standard is a good idea. This will help tenants know what is needed to get their security deposit back and it should reduce any required maintenance come the end of the tenancy (again reducing the dreaded void periods).

As ever, choosing the right tenants is important in allowing them the flexibility to live in the property as if it were their own. Whilst the best tenants will ask before making any changes and implement them in a reasonable manner, bear in mind that the worst tenants will just go ahead and do it anyway. Having a more collaborative approach should see happy and content tenants wanting to stay longer in the landlord’s house, having turned it into their home.

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Preparing your property for Winter

The following tips can be applied all year round but they’re particularly relevant at this time of year as it gets colder, darker and wetter outside.

Familiarise yourself with your property

Ensure you know where the fuse box, gas safety valve and water stop valve are and how they operate, in case of an emergency (I provide a house guide to my tenants with this information and also show them when they move in).

Keep on top of basic maintenance

Check roofs and gutters for slipped or damaged tiles and for any leaks. Check overflows and pipework for any leaks as well as damp smells or flaking paint, which may indicate a hidden problem.

Bleed the radiators and check the pressure of the boiler to see if it needs topping 

   up.

Avoid condensation

Build-up of condensation can be more prevalent in winter as more heating is used, clothes are dried inside and there is a tendency to want all the windows shut.

All this moisture in the property needs to go somewhere and will invariably attach itself to cold surfaces (exterior walls/window surrounds) and create unsightly 

   condensation/mould patches.

  Keep windows open throughout the property, particularly in bathrooms and kitchens 

  and especially during and after showering/bathing and cooking. Use extractor fans 

  where fitted and wipe down any wet surfaces after using the shower/bath.

Don’t turn the heating off completely

This is very important to prevent the freezing of the water system and expensive burst pipes. It’ll also help in the fight against condensation, which thrives on a changing temperature.

The easiest solution if you are planning to be away from the property is to leave 

   the boiler on and set the thermostat to a low temperature e.g. 12 degrees.

Fire safety

Do not overload electrical sockets with appliances and Christmas lights as this can cause a fire hazard. Avoid using candles, particularly near Christmas trees, decorations and curtains.

Test all smoke and carbon monoxide alarms to ensure they are working correctly.

I believe prevention is better than cure, which is why I pre-arm my tenants with a 'winter maintenance guide' at the beginning of their tenancy and re-issue it as winter approaches. You can download this short guide, free of charge, from www.crjlettings.co.uk/winter-advice

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Five tips to avoid ‘slum landlords’

Despite mainstream perception, the majority of rental properties are let by landlords who wish to provide safe and pleasant accommodation to their tenants, in exchange for receiving a fair rent. Unfortunately, like in any industry, there are rogues that don’t follow this convention and instead treat their tenants (and property) poorly. Here are five tips for tenants to try to sniff out and avoid these so-called ‘slum landlords’. 

1. Check the basics are in place

All rental properties should have an Energy Performance Certificate, Gas Safety Certificate (if there is gas at the property) and an Electrical Installation Condition Report. These three documents ensure the property is suitable in regards to energy efficiency and safe in regards to the gas and electrical installations. If a landlord doesn’t have or know about these, they are illegally letting the property and clearly don’t understand even the most basic of their responsibilities.

2. Check the property’s condition

Don’t just rent a property based on photos or an online advert - be sure to see it in the flesh! Feel free to check fixtures and fittings at viewings; I’m used to prospective tenants checking the shower pressure to ensure it’s adequate before they move-in. Whilst sometimes there will be works scheduled to be done to the property between a viewing and your move-in, be wary if there are structural or troublesome-looking damp problems, as these can be harder to resolve and there’s no guarantee it will be done to your satisfaction (or in the case of a real slum landlord, done at all!).

3. Check where your money goes

Letting agents must have Client Money Protection, whereas dealing with a landlord directly does without this safeguard. Most transactions will be done via online banking nowadays, so at least there’s a trail of what has been paid. Cash in hand payments should be avoided for this reason and may also point towards a landlord with something to hide (you should at least insist on a receipt). 

You may wish to do a Land Registry search on the property you intend to rent (it only costs £3) to ensure the named owner of the property matches the person you’re about to hand your money over to. 

Meanwhile you’ll most likely pay a security deposit (typically five week’s rent), for which it has been mandatory since 2007 for the landlord to register it into a government-approved scheme. Ask them which one they use - any that respond they “don’t bother with that” should be avoided.

4. Check what the service will be like

Online reviews are easy to find for letting agents and should give you a good idea of the level of service you’ll receive. Whilst this is more difficult when renting from landlords, a quick ‘Google search’ of their name should throw up anything particularly nefarious.

Consider the property as it is now - if it’s been left to get run down then that is quite possibly how it will be managed after you’ve moved in too. You might also like to ask the current tenants how they’ve found things at the property and with the landlord.

5. If the landlord isn’t worried, you should be

Landlords are likely to be as anxious of renting to a bad tenant as you are of renting from a bad landlord. Any who seem too relaxed and eager to simply get you to sign on the dotted line may not be as friendly as they first appear. 

Legitimate landlords will typically want proof of your earnings via bank statements and ID (to conform with the ‘Right to Rent’; another legal requirement on their part). If a landlord isn’t concerned about this it might also point towards an overly-relaxed attitude when it comes to                                        their basic legal requirements and resolving ad-hoc maintenance issues.

So, whilst most tenants simply consider the property when they are searching for their new home, it is equally as important to consider who you’ll be renting it from. Consider whether you are confident that you can trust and communicate with your landlord or letting agent openly. Hopefully the tips above will go some way to ensuring you don’t get trapped in a property that looks ok on the surface but is run by someone who turns out to be a ‘slum landlord’.

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Five tips to avoid ‘nightmare tenants’

Most tenants simply want to live in peace in a home that they can treat as their own, whilst happily paying the going rate to do so. A very small percentage, however, will set out to either mistreat the property or purposely not pay the rent. Here are five tips to avoid these so-called ‘nightmare tenants’:

1. Offer tenants a nice home

If you offer a neglected property in poor condition, you are likely to attract less interest and will have to settle for tenants who are perhaps unable to secure a ‘nicer’ home. Meanwhile, if the property is well-presented, it will attract a wider pool of tenants to choose from and they will most likely take pride in keeping it in good condition. 

This applies to ongoing maintenance issues too; afterall, if you don’t care about the property, why should your tenants? Furthermore, tenants will feel aggrieved paying full rent for a property that isn’t fully-functional or being maintained as it should be. 

2. Match the property to the right tenants

It’s hard to say no sometimes, but a property needs to suit its occupants. For example, most blocks of flats won’t accept pets as it is part of the head lease. This isn’t unreasonable if you think about trying to live with a dog in a small second-floor flat with no access to outside space and with neighbours on all sides of you. It might also be unwise to allow two adults and three children to rent a two-bedroom flat; they simply need more space and amenities than that to live comfortably and to be able to keep the property in good order.

3. Reference thoroughly

This is probably the most critical step in ensuring you avoid ‘nightmare tenants’. Helpfully, referencing is something that prospective tenants with something to hide will try to avoid. Do not take shortcuts because a tenant wants to let the property quickly, can offer monies upfront or because a ‘friend of a friend’ says they’re “good for the rent”. Genuine tenants won’t quibble about you undertaking credit checks and asking for documentation, such as payslips and bank statements, so as to give you a full picture of their financial standing and rental history.

Furthermore, (and similar to point 2) you aren’t doing someone any favours in allowing them to commit to a rental property that is simply too expensive for them in the first place.

4. Ensure all the paperwork is in place

Tenancy agreements should contain clauses relating to sub-letting, noise, pets and other common do’s and don’ts, which will help avoid conflicts later on (and can become grounds for eviction if they are ignored). A detailed inventory, including photos, not only serves as a record if there is a dispute over the deposit at the end of the tenancy, but acts as a deterrent in the first place (as the recording is so detailed) and a guide for tenants at the end of tenancy (so they can check how the property should be left so as to receive their deposit back).

Ensuring all the paperwork is completed and provided to the tenants in the correct manner will also avoid problems later on. For example, if not served correctly, you open yourself up to fines, compensation claims and difficulty in progressing eviction notices if necessary; all of which a ‘nightmare tenant’ could use against you.

5. Keep in touch

Maintaining an open dialogue with tenants and responding to tenancy-related and maintenance queries promptly will encourage a good relationship. Visiting the property regularly will allow you to spot problems early, as well as checking all is ok with the tenants so as to maintain and prolong their tenancy. It also shows you are pro-active and haven’t just ‘left them to it’; tenants are more likely to take liberties with absent landlords. 

There are many other ways to minimise the risk of letting your property to problematic tenants, some of which are quite subtle and come via experience. Ultimately there is no fool proof way to avoid a ‘nightmare tenant’, although these five tips will go a long way to avoid those who seek to enter a tenancy agreement with bad intentions from the outset.

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How much does a bedroom cost in Chichester?

Many first-time buyers will start out with a small ‘starter’ home, which is both suited to their needs and matches their modest earnings at the beginning of their careers. But as you get older there’s a tendency for extra possessions to pile up and for extra people to emerge in your life! This made me think; how much is a bedroom in Chichester and how much does it cost to climb the property ladder?

Let’s start with a one-bedroom property (typically a flat). The average price for one of these in Chichester is £200,000. As many will appreciate, the first step is often the hardest and that’s no exception when it comes to buying a property. The income and deposit you’ll require to afford even the most modest of homes in Chichester is probably the greatest barrier to getting on the property market.

Once you do though, and you hopefully rise through the ranks in your chosen career whilst growing your nest, the increase in price to afford an extra bedroom becomes a little easier at each rung of the ladder (in percentage terms).

The average two-bedroom property in Chichester will cost you £320,000 - a premium of £120,000 (60%) compared to a one-bedroom home.

The average three-bedroom property in Chichester will cost you £450,000 - a premium of £130,000 (41%) compared to a two-bedroom home.

The average four-bedroom property in Chichester will cost you £625,000 - a premium of £175,000 (39%) compared to a three-bedroom home.

Of course, this price increase isn’t just for an extra ‘bedroom’. As the number of bedrooms grow, so should the size of the other rooms throughout the house, as well as the outside space and amenities e.g. garden/garage/driveway.

It does however demonstrate that it’s the first couple of steps that are the toughest on the property ladder, which is why it’s common that government policies and incentives focus primarily on first-time buyers. Having said that, bear in mind that the need for an additional bedroom affects the ‘upsizers’ at a time when the financial strain (a new child being the most common) is often at its greatest.

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Buy-to-let: home or away

Opinions are divided over whether you should invest in buy-to-let locally or venture further afield in an attempt to achieve better returns.

The area you invest in should be considered alongside your strategy and goals. Certainly if you’re looking to invest in student lets you’ll want to buy near a large, vibrant and growing University. Budget may also be a factor, whereby local house prices are simply too high for you to buy an appropriate property. Many Londoners have to buy outside the city because of this, although many will now rue missing out on the spectacular capital growth London property has seen.

When I began investing in property I spent a long time deliberating on where I should buy. Trying to find the next up and coming area to invest in that offered the holy grail of high yields and strong future capital growth appeared elusive. In the property boom years I researched city centre apartments up North as well as foreign property in Bulgaria, Cyprus, Florida and Las Vegas.

Whilst the glossy brochures promised quick riches, ultimately I decided that the grass wasn’t actually greener elsewhere. There are in fact many reasons why I believe you should keep it simple and invest close to home.

Familiarity is often the biggest reason why many landlords buy locally. You’ll know where the best areas are, which are the decent schools and the good transport links, along with a knowledge of the upcoming developments that will impact the area. 

You could spend time walking the streets and meeting with local agents. Nothing beats face-to-face contact and building rapport with people who can advise and support you. It’s easier to spend more time in a local area so you can work out the facts as opposed to relying on third party information.

It is obviously far more convenient to manage a buy-to-let close to home. Whether that be overseeing a refurbishment, the on-going maintenance or managing tenants. Having a property nearby saves a lot of time and this is perhaps why over 50% of landlords choose to buy within 10 miles of where they live.

Buying locally might mean you decide to self-manage the property and therefore save yourself the letting agent’s management fees. Even if you do hand the keys over to an agent, there’s certainly some peace of mind knowing the property is within easy reach should something go wrong or you simply want to keep an eye on things.

If you’re thinking of investing in buy-to-let and would like some free advice about whether your local area can meet your needs, please get in touch.

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