Managing and maintaining your property

This is probably the single biggest factor that stops people getting involved in the 'buy to let' market. They don't want the hassle of finding a tenant, regularly maintaining a property and the legal responsibility in relation to safety of the building and its fixtures and fittings. The easiest way to relieve the pressure is to employ a letting agent. For a fee the agents will find and deal with the tenants, so that you don't have to get involved.

They will also handle routine maintenance. For first timers, this can be the best way to learn the ropes without getting burnt but your return will be reduced by the amount of the agent's fee.

Being a landlord means that you will have to comply with government legislation regarding the safety of your property. Fire retardant furnishings, properly inspected and certified gas appliances and smoke alarms are just a few of the precautions you will have to take into consideration.

To get a complete breakdown of what you'll need to do to make your house legal, speak to the Association of Residential and Letting Agents (ARLA) who publish a free information pack or visit their website (www.arla.co.uk). For more detailed information, however, you need to become a member.

Going it alone

Having advertised your property and found potential tenants you need to make sure they are suitable: it is not simply a case of sitting back and watching the money roll in.

Always make sure that you have a signed tenancy agreement when you are renting. You can download a standard tenancy agreement and booklet 97 HC 228 B from the Office of the Deputy Prime Minister will also be useful. Or you can ask for one from the Citizens' Advice Bureau. It's a sensible idea to have your solicitor look over the contract and add any individual clauses that you require.

Suitable tenants should be able to supply employer and personal references showing their rental history and that they can afford the rent. Take one month's rent up front as a deposit to cover any damage or defaulting on payments. It's also necessary to take a full inventory of what's in the property and the condition the items are in when the tenant arrives.

Go through the inventory with the tenant and get them to sign an acknowledgment of what the house contains - there's nothing worse than going back to your property after the tenants move out to find they've damaged or absconded with the furniture!

Taxes

This is an area that can sometimes be neglected by landlords. You have to pay tax on the rent you receive, less deductions for interest payments and allowable expenses. As you will have to calculate your profits and declare them through a tax return each year, you might want to consider employing an accountant. You will also have to pay capital gains tax when you come to sell the property. Download the latest Inland Revenue rules on tax for land and property IR150 at www.inlandrevenue.gov.uk

With the current state of the mortgage market and the still low interest rates, becoming a landlord can see some serious returns. The key to making 'buy to let' work is to keep it simple. Keep focused on the basic rule - is the return on investment sufficient?

Martin Frazer is General Manager, Operations at the Scarborough Building Society. For more information about their products, including 'buy-to-let' mortgages, tel: 08705 133 149 or visit www.scarboroughbs.co.uk