"Buy-to-let remains hugely popular in the UK despite the recent government clampdown on landlord's revenues. In fact, Sainsbury's Bank found almost one in 10 (9%) adults have shown an interest in taking out a buy-to-let mortgage this year" - Love Money.
Despite the ever-changing political climate and market affecting buy-to-let investment, this sector has remained a steady and lucrative business model for investors. There are a number of things that you, as a buy-to-let investor, can do however, to ensure that you are making the most of your opportunities amongst Brexit and new laws surrounding tenancy fees.
Have you read Part 1: Do you know the rules and regulations?
Choose the right investment for you as an investor
One of the most important things you can do as a buy-to-let investor is picking the right investment for you - not due to personal connection to an area or property, but right for your business model and portfolio. One of the biggest mistakes an investor can make is choosing a property based on it being somewhere they would want to live.
You also don't necessarily have to choose an investment that's close to you, if you have a good lettings and management company looking after your property. In the difficult and shifting market we are currently in, choosing an investment based on the best location is more important than ever. Previous hotspots such as London have seen a decline in investment yields and opportunities since the referendum, whilst more northern cities such as Manchester, Liverpool and Birmingham have soared in popularity, offering and demand.
Picking the right property is also important, not just picking the right location. Doing research into what types of properties rent well in your chosen location will allow you to put together a good plan before you start looking at available properties.
Making sure you choose your property and the location based on facts, not personal preferences. "As a rule of thumb, urban areas with good transport links into town or city centre, plenty of local shops, bars and restaurants are good rental locations" - Love Money. It's also important to consider your niche as an investor - is there a particular type of property you are more comfortable managing? Are you looking to manage the properties yourself, or looking for an armchair investment? Do you feel more comfortable managing a HMO or smaller lets with one or two tenants?
Secure a good mortgage that's right for you
Available buy-to-let mortgage products are currently highly competitive, with more mortgages available now specifically for buy-to-let investors than there has been since October 2007. Rates for the almost two-and-a-half-thousand products available have gone up slightly - rising by 0.17% in the last 12 months - but still offer great options for buy-to-let landlords looking to secure a relatively cheap deal.
It is important to note, however, that to secure a good buy-to-let mortgage it's essential that you have a good-sized deposit to reap the benefits of it being a profitable investment. It's suggested that you will need at least a 25% deposit for a buy-to-let mortgage (Love Money), although if you are able to push this to a 40 - 50% deposit you will be able to secure the best deals.
One area of the property industry that has possibly been positively affected by Brexit is buy-to-let mortgages. Whilst before the uncertain economic times landlords usually needed to prove the rent they would be receiving on their property could cover at least 140% of their mortgage payments, many lenders now only require landlords to prove they can cover as little as 125% of their repayments (Which?).
Mortgages for buy-to-let investors are very attractive right now, however This Is Money warns that investors should 'beware low tax rates'. "One day they must rise and you need to know your investment can stand the test. There is also a tax rise being put in place, as buy-to-let mortgage interest relief is axed and replaced with a 20% tax credit. Additionally, since April 2016 landlords now have to pay an extra 3% stamp duty on property purchases". However, with a greater demand from tenants for high-quality accommodation and predicted rental inflation rates, many investors are still being drawn to buy-to-let specifically.
Will you manage your property on your own, or leave it to a letting agent?
Especially for first-time or relatively inexperienced buy-to-let investors or landlords, it can be a massive help to put the management of their rental properties in the hands of an experienced letting agent. There are many things that a letting agent can help you with; you may need an agent to simply find and vet tenants for you, or you may want to get an agent who will manage the entirety of the process and aftercare for a completely hands-off investment.
If you choose to go it alone, make sure you are up to date with all the regulations and responsibilities you have with your property. Consider things such as whether you need landlords insurance, are you confident in the tenant referencing and managing your tenants needs, are you able to manage the maintenance of the property and make sure all repairs are carried out properly. As a landlord, you have a legal responsibility to make sure your property is not only following regulations such as having at least an EPC rating of E, but that all health and safety, fire and gas regulations are being followed.
The changes to the energy efficiency of properties is an important regulation all landlord need to pay attention to. Coming into effect in April 2018, the Minimum Energy Efficiency Standards (MEES) state that any rental accommodation needs to have a minimum energy performance certificate (EPC) rating of E. Whilst this is currently only in effect for new or renewing tenancies, by 2020 all tenancies will need to have this rating. "Initially it seemed that landlords who couldn't secure government funding to make changes could claim an exemption, but in November  the government clarified that [all] landlords would be liable for costs of up to £3,500" - Which?
Do you have a solid exit plan?
While buy-to-let investments work best as a long-term commitment, it's also important to consider (and have set solid in place) an exit strategy before you purchase any properties. Historically, those investors who hold buy-to-let properties short-term - usually until the assured rental yields are over - are the ones who will be less lucrative in their overall business (Love Money). While it's not essential to keep your buy-to-let investment for decades, it is important to keep track of rental trends and the demand in certain areas to know exactly when is best to sell on your property and amend your portfolio.
Tenants are getting a tool that will allow them to vet their landlord too
Launched in 2018, the government's Rogue Landlord Database was created to allow for the vetting of landlords, however six months after (in October 2018) its launch the database remains empty (The Guardian). Currently, the database can only be accessed by central and local government officials, however this is set to change this year and tenants will openly be able to search for landlords. This will allow for prospective tenants to find landlords who have positive ratings and will, hopefully, have a positive effect on the sector by reducing the number of 'rogue landlords' able to find tenants.