Join the buy-to-let set

By Natalie Gameson
Posted: 2008/09/08

HERE is some good news for investors: rents are soaring

Up nearly 10 per cent over the last year according to new figures from buy-to-let lender Paragon Mortgages, rents are working nicely to offset increased costs for landlords, coming in at an average of £1,000 a month.

Investors, like all other players in the market who have bitten off more than they can chew, fiscally speaking, are as caught in the credit wheel as any sub-prime borrower in these difficult times.

Void periods, worrisome even when the economy is buoyant, can be the kiss of death to already overstretched landlords, as therein lies the road to repossession.

Securing committed tenants is never easy even in a good market, but one such species of renter is the corporate client.

Jemma Scott at Knight Frank said: "The corporate tenant is every landlord's dream.

"The wear and tear wrought to the property is minimal - most tenants will spend all their time in the office and eat out every night."

Owners in any property pocket with quality housing can tap into this market.

Rick Flay of letting specialist Belvoir Lettings' Sheffield branch added: "We've got a lot of footballers on our books who rent out their homes for between £900 and £1,500 a month - not a huge sum by London standards, but it's a lot for Sheffield."

Which? property expert Kate Faulkner said: "You can either contact the company directly through its HR department or get into the market via relocation agents.

"Often companies prefer to let via agents, as they will deal with all the legal paperwork, although if you have a great property, this may not necessarily be an issue."

Letting a room in your home to a company is also viable if your house is nice enough.

Ms Faulkner added. "You can earn up to £4,250 tax-free a year going down this road, or £350 a month which, if your portfolio is losing you money, could potentially save you from repossession.

"As long as you provide a bed, a wardrobe and a desk, you could be looking to attract anyone with specialist skills, such as engineering, who may be contracted in by a firm for several days a week.

"If businesses are putting up staff regularly in hotels, they could save money by renting your property on a lease, and save thousands on bills - an attractive alternative in this economic climate."

Beginner investor Ian Fogg bought his first four flats over the last year off-plan from developer St George in Fulham, renting out two of them on completion to corporate tenants procured by Knight Frank.

He said: "A lot of companies are moving to the area, so it made sense to aim for corporate tenants.

"The main downside is that you do have to furnish the lets to a very high standard. It can add a third to the price. But the upside of that is that they can be let out very quickly.

"The rents I'm achieving are paying the mortgages on the flats at the moment, while I've got the security of assured rent from the companies involved."