Look before you leap into lettingWhich? guide gives the lowdown on buying-to-let

13 September 2006

All homes with 4 or more bedrooms will now need a HIP

Anyone thinking of buying property to let should think carefully - they may be better off putting their money in the bank.

That’s the advice of the Which? guide called Renting and Letting, which is out today. It urges investors to do their homework before shelling out on another property.

Buy-to-let borrowing set new UK records in the first half of this year, with lenders advancing 152,500 loans, worth £17.5 billion.

Buying property to let can be a sound investment that will bring in a decent return while the house or flat also rises in value.

Buy to let?

But it isn't all plain sailing and would-be landlords need to weigh up the pros and cons carefully.

The key is to think in terms of running a business. Basically, turnover in the form of rent needs to exceed the costs of buying and maintaining the property.

As a rough guide, the rent from the property needs to exceed running costs by 25-30 per cent. This profit will cover the owner for times when the property isn't rented out, any large expenses such as a broken boiler, and costs such as tax on the rental income.

Kate Faulkner, who wrote Renting and Letting, says: ‘Budding property entrepreneurs should remember there are lots of ways of investing, and buying property can be risky.

‘You must be sure at the outset that buying to let will give you better returns than putting your money in the bank for the same period of time.’

Renting and Letting costs £10.99 and can be ordered on 01903 828557 or through our online bookstore . It's also available in bookshops.