Tenant arrears and potential problems with tenants - how often does it happen?

steampowered

It is possible to buy insurance which covers non-payment of rent. Of course, it is just an extra cost which would need to be budgeted for - alongside mortgage lender fees; mortgage interest; letting agent costs; solicitor fees; stamp duty; maintenance costs; and tax. It all adds up and all needs to be factored into your calculations to decide whether BTL is really the best option.

Could you consider a balanced portfolio of stocks & shares instead? The major stock markets have historically generated a return of 7-8% per year, so that would be a reasonable expectation over the long term.

A key advantage of stocks & shares is that you can hold them through an ISA - which makes the returns tax free - compare that with a BTL property where you would have to pay higher rate stamp duty on purchase; income tax on the rent; and potentially capital gains tax on sale.