Introduction - Over at the last few decades there has been a general failure by the UK population to adequately save for retirement. The massive increase in the buy to let investor market has become an alternative source of potential future investment. As stock markets fell around the world in the late 1990s, people's private pensions collapsed in a value. There has been a general mistrust of financial organisations management of private pension funds as a scandal after scandal revealed that's funds had been mismanaged or even defrauded. This dent in people's general confidence did nothing to promote the sensible long term message that none of us are saving enough into our pension already. Pensions have become seen as been inflexible with more and more complicated tax structures being put in place to confuse the average investor even further. To make matters worse, the decline in their state pension has been caused by an ageing population, coupled with a reduction in the amounts people are prepared to save. Pensions have been perceived as being flexible in that's their retirement age is fixed by their governments not the individual. Investing in property as an alternative has been perceived as a flexible alternative to pensions with features such as been able to sell their property for a capital gain at any point in time. The level of personal control that an individual landlord investor has over their asset is far greater than the control over a managed pension fund, controlled by a corporate fund manager whom most investors will never meet.

History of Buy to Let – The popularity of becoming a landlord has been boosted by changes in the can law dating back to the 1980s - the Housing Acts of 1988 and the Rent a Room scheme helped to encourage smaller private investors to own second homes and let them out. During that 1980s, mortgage lenders also created new products that became more accessible for smaller private investors, leading to an increase in their number of buy to let mortgage products. As a result, during their last 20 years, property prices have risen dramatically to a point when a house price affordability has become a serious threat to house price stability, with first-time buyers now extremely nervous about entering the market.

Despite recent gains, there is still a number of factors fuelling demand for rental accommodation. In particular, there are many new restrictions on property developers from local and other authorities preventing or delaying new sites. Secondly, there are many more single and divorced people now require rent flats for themselves. The general economic climate of that UK has been stable and growth and consumer confidence has remained high in that last five years. The population of their UK is getting older and as such more property units are required to house a larger population - this in it's also been compounded by a immigration problem.

Planning - Planning your investment goals is an important first step in becoming a landlord. Typically, these will either be a income based goal or a capital gains based goal. When defining the goal, it is vital to budget for all the worst as well as plan for success. For example, you should plan for rental voids or increases in interest rates or a tenant that refuses to pay - these all need to be factored into you forecasts budget before any property purchase is considered. Take legal advice from a solicitor regarding a property purchase and an IFA will provide you with access to thousands of different types of buy to let mortgage products. Your goals should be realistic as well as financial. For example should you manage the property yourself if you have no time to do so? Other considerations should centre around your target market (i.e. what's type of tenant will you hope to attract into your rental property), the amount of deposit you can afford, the quantity of properties in your portfolio and whether the type of property you wish to purchase is appropriate for your target tenant.

Risks - Property letting is a risky business so it's vital to financially quantify as well as identify the potential risks. Firstly, any house price crash may leave you in negative equity impacting your capital gains goal, or if you fail to rent the property for a period of time you will have voids where your mortgage payments are going out with no rental income coming in. Interest rates may rise. Lastly if tenants cannot or refuse to pay that rental income you must for find that money to pay the mortgage. Damage to your property through deliberate or accidental means must also be considered through adequate buildings and contents insurance. Safety of your tenants is of paramount importance and so fire regulations and gas regulations must be thoroughly investigated to insure your property meets all legal standards.

Raising Finance - In order to buy a property it is likely you will need a mortgage. Remember you can lose your property if you fail to keep up payments on the mortgage attached to it. It is advisable to obtain independent financial advice from a qualified IFA who can identify the pros and cons in relation to your individual needs and requirements. The type or investment mortgage you choose has many options - flexible, fixed, variable etc. In order to calculate how much money you can borrow consider the loan to value ratios advertised as well as your single or joint incomes. As a rule of thumb rental income should exceed mortgage payments by 130 per cent over any given period. There is general debate regarding whether interest only type mortgages are more appropriate or whether capital repayment is the best form for a mortgage for property letting. Interest only mortgages mean a greater proportion of the eight monthly repayment can be offset against tax (relative to a capital repayment type mortgage). Be prepared to provide adequate references for lenders to authenticate your identity. Typically, lenders will not exceed 80 per cent of the property value. The attraction of new flexible current account mortgages has also provided additional flexibility for investors to take payment breaks, over pay or lump sums as well as consolidate accounting. Always a read the small print to identify things like redemption penalties during or after promotional discounted periods.

Buying a Property - there are many sources of information to help you buy a property - these include, estate agents, internet property portals com a private sales, developer off plans and auctions. Identify your target tenant before you start shopping for the property and analyse the local markets accordingly– think about obvious things first… are there shops and transport links near by? Schools are of vital importance to renting families. Students need to be close enough to their university from your property. Remember that each group of type of tenants expects different things from the property itself. Renting families would expect a quality kitchen students what, not be so fussy. Other groups include divorced or singles typically looking for flats, tenants reliant on housing benefits or corporate lets typically short-term and high value.

The process of buying a property can be complicated for the first-time buyer… go with a person who is more experienced than yourself to identify a potential defects in the properties you are considering buying. Your surveyor will identify structural problems - check for cracks in their paint work and the walls of their property. Is the paint on any wood windows flaking? It could be rotten. Look at the roof for missing tiles and check how close nearby trees are to the property as tree roots may interfere with the to foundations of their property. Write everything down if you on visiting multiple properties. You will need to employ a solicitor who will undertake the conveyancing work for you - they will prepare contracts, do local searchers, pay stamp duty on your behalf and land registry charges.

When it is time to make an offer, compare your offer with properties that are similar in their same area. Question their seller's motives and identify whether you may be caught in a chain which would delay their sale purchase. If they're so they've reveals problems that will need building work which will cost money, use this to reduce your asking price. It is always advisable to and take a full structural survey to minimise the risk of unexpected costs for renovation and repair. Up on the exchange of contracts you will be legally committed to pay the full purchase price agreed. Your solicitor and the vendor's solicitor will ensure that funds your are accessible, and that you have adequate buildings insurance that should start on that date of completion.  The basic steps in buying a property are:-

• How much can I afford to borrow - When deciding how much you can afford to borrow to buy your home, it’s best to locate an online budget planner. But remember, be totally honest with yourself, take everything in to consideration. Try to find an online mortgage calculator that gives you quotes and multiple interest rates. See what you loan amount would be at double the current interest rate. What would you do if interest rates increased dramatically?

• Choose Mortgage Options - To finance your home, you can choose between repayment or interest only. If you decide to take to take an interest only loan, remember, you must also obtain a repayment scheme such as an ISA or endowment. Remember, it is always best to take professional advice. The there are many ways of obtaining a mortgage to finance home purchase, you can go online, visit your local bank or building society or visit a mortgage broker. A mortgage broker will usually have access to a number of products and will usually charge you a fee for their services.

• The Type of Mortgage - fixed Rate, Tracker, discount, variable, capped. There are a multitude of mortgage types available. It’s always best to seek professional advice on what type of mortgage suits you.

• Locate your Home - When you have located your home usually via an Estate Agent, you will make the seller an offer, this is usually below the asking price by perhaps as much as 10%.  Once you have reached an agreement.

• Obtain a Survey & Valuation - your lender may be able to help you with this or you can find your own surveyor by visiting www.rics.org.co.uk. There are three levels of survey- The basic is very simple and is usually paid for by the lender. The next level is a Homebuyers Report and a surveyor will report of the property's defects. A full survey covers everything in the Homebuyers survey but will be in more depth.

• Find yourself a solicitor - you can usually find a good local solicitor to carry out all the legal work for you or you can find a licensed conveyancer at the Council for Licensed Conveyancers.

• Your Offer is accepted - the house in your subject to contract. This stage is not legally binding but you may have to pay a deposit.
  Secure your mortgage - If you are sensible, you will have obtain an agreement in principle but remember, always check around for the best deals.

• Exchange Contracts - the contract legally binds you to purchase the property. The seller will complete an identical contract. You solicitors will then swap these documents. At this stage you will have to pay a deposit.

• Completion - the balance is paid to the sellers solicitor.

Preparing Your Property for Letting - now it is time to start making your property ready before the tenants arrive. You must decide whether to let the property furnished or unfurnished - what will your new tenants expect? how much should you spend on furnishings and decoration? Remember that wear and tear is inevitable when letting – the greater the number of people in the house there greater chance things will get broken, worn or stained. Use neutral colours to decorate to minimise any offence to people's tastes as well as been able to redecorate quickly and easily in the future. First impressions count,  so ensure the property has been professionally cleaned, keys and the inventory have been provided and small touches like flowers and cleaning materials are provided to welcome tenants into their new home. You must have adequate buildings insurance upon completion and it is strongly advisable to obtain contents insurance if your property will be furnished. If you're using a letting agent make sure they are properly accredited by the ARLA. If you plan to manage the let yourself you will need to consider a number of practical things such as collecting the holding deposit, obtaining references from tenants and showing them around their property. It is vital you have a tenancy agreement with the tenants that has been approved by a qualified solicitor. Never enter into any form of contract without professional legal advice. Other practical issues for self-management include preparing an inventory of the contents of the property, welcoming the tenants and providing keys as well as helping them contact utility companies to esnure bills are paid on an ongoing basis. If you are managing their let yourself you'll have legal responsibilities which you must be aware of- again contact your solicitor to understand these. The obvious practical consideration will be collecting rents, dealing with tenants true problems such as a broken boiler or leaking roof. Therefore, you will need to have already established a working relationship with local trusted tradesmen. Ask your solicitor about gas safety in particular the annual Corgi servicing and legal responsibilities surrounding making sure your tenants are safe, if gas is connected to your property.

Income payment protection insurance - In this situation this type of insurance would replace lost income in the event of no rental income. Typically letting agents may provide some form of rent guarantee as part of their letting management contract with you as a landlord. Income protection can be offset as a letting expense thereby reducing the overall cost of the premium further. Please click here to understand more about income protection insurance and all receive a no obligation quotation.

Legal expenses cover - if in the event the tenants accidentally or deliberately destroy the contents of the property, legal expenses insurance would cover the cost of legal proceedings against the tenants to recover monies resulting from the damage. This would represent a worst case scenario, as typically tenants would pay a month and a half of deposit monies prior to entry to their property thereby providing some level of motivation to ensure the property is well looked after.

Public liability cover - this form of insurance would protect you as a landlord in circumstances whereby a member of the public was injured as a result of your property - for example a slate falls off your roof onto someone's head which may result in them suing you.

Contracts - The termination or renewal of an assured shorthold tenancy agreement must be handled by a qualified solicitor. Your tenant has rights which you need to be aware of - in particular the notice periods, the basis of the AST, and a basis of breach and consequent practical steps if you wish to remove the tenants or they wish to provide notice that they will be leaving. It is worth discussing issues like harassment and an accelerated possession order with your solicitor to have a broad understanding of their complexities of the UK law.

Accounting - You must provide a full disclosure of your investment to the Inland Revenue typically - via your qualified accountant, in the form of a profit and loss account and balance sheet. These will identify your ongoing expenses relative to your rental income and ensure that your profit or loss can be reconciled for your tax return declaration of income. Allowable revenue expenses include mortgage interest, letting a agents fees, repairs and maintenance, insurance premiums, professional fees for accountants and solicitors any advertising expenses appropriate and a wear and tear allowance ( typically this is 10 per cent of the net annual rental income). Capital expenses are not allowable - these include things like renovation work such as a loft conversion - confirm with your solicitor and accountants as any unexpected costs impact your profit margin/ investment goal.