Ultimate Guide for New and First-Time Landlords

Ultimate Guide for New and First-Time Landlords

May 6, 2016

Ultimate Guide for New and First-Time Landlords

For many homeowners, becoming a landlord is a great way of producing an extra income stream. If you have spare living space, why not let it out to make a little extra money? It can be difficult, however, to deal with some of the problems that can arise when letting your property, and the process of preparing your property to let is not quite as simple as it may seem at first. This guide will help you make the most of your property and help you avoid some of the potential pitfalls of becoming a first-time landlord!

Registering as a Landlord

Becoming a landlord takes a little more work than clearing out your house and taking out an advert in the local paper – you’ll need to do some groundwork before you can advertise your property for rent, and without properly following the regulations you can find yourself in trouble! The first step to take is to register with the relevant authorities so that your paperwork is in order to allow you to let your property:

Inform your mortgage provider that you intend to let the property. Not all providers will be content to let you remain on the same mortgage, and may insist that you transfer to a buy-to-let mortgage, typically at a higher rate of interest!

Inform HMRC that you expect to have a lettings income in the following year. Registering your income before you begin saves you a lot of hassle when it comes to paying tax, and can avoid problems if HMRC discover you are letting without having declared it.

Check with the freeholder if your property is part of a larger building (like a block of flats). Some freeholders do not allow parts of their property to be let, so check with them before you proceed any further.

In Scotland, you’ll need to register as a landlord with your local council before you are legally allowed to rent out your property.

 

Should You Use a Lettings Agency?

In an ideal world, being a landlord would simply require you to pick up a rent cheque once a month. Unfortunately, the business of keeping your property in good order and dealing with your tenants is a fairly time-consuming one, so many landlords choose to use a lettings agency instead. These businesses will take on the organisational (though not financial) burden of letting your property, finding new tenants, drawing up agreements and liaising with contractors, allowing you to spend your time elsewhere. If you’re planning on investing a lot of time into becoming a landlord it’s usually cheaper to go it alone, but if you simply want a hassle-free way to let your property an agency will make the job a lot easier.

In short, lettings agencies will make the lettings process much easier on you, but will eat into your income. Whether that’s worth it to you is down to the type of landlord you plan to be!

 

Preparing Your Property for Let

Once you’ve taken care of the paperwork, it’s time to get your property ready for tenants. To be a successful landlord it’s not only necessary to follow the letter of the law, but also to provide a comfortable living space for your tenants.

Furnishing Your Property

When deciding how to furnish your property you’ll need to consider how you want to market it – will it be fully furnished with furniture and white goods? Or will it be only partly or un-furnished? Typically, furnished properties are more attractive to tenants, as they won’t be responsible for the expense and maintenance of bulky furniture and goods, but an exception to this is families who are looking for a long-term lease in lieu of purchasing a home of their own. They may well want to provide their own furnishings, so consider what sort of tenants you’d ideally like, and furnish your property accordingly.

It’s important to ensure that everything in your property is in good condition before you let it. Scuffed walls, leaky pipes and unreliable white goods not only make your property less appealing to prospective tenants, they’ll cause you a headache to fix once your tenants are in residence. Invest in good-quality furnishings and a decent handyman to fix any small issues, and you won’t find yourself constantly having to deal with upkeep on the property whilst your tenants are in residence.

Checking Your Property’s Safety Record

As landlord you are responsible for the safety of your property, and you must ensure that your property is certified with up-to-date safety checks on all the following equipment:

Gas-powered equipment such as boilers and cookers will need to have an annual safety certificate from the Gas Safety Register, and a copy of this certificate should be passed on to the tenants.

Electrical installations will need to have been given a visual check at the very least; the Electrical Safety Council recommends that a qualified electrician should carry out these checks at the beginning of each tenancy.

Fire safety checks should be carried out annually to identify potential hazards and address them. You won’t need a specialist to advise you, but you will need proof that you undertook a proper assessment of the property. Ensuring that there are smoke alarms fitted, that all fixtures and furnishings are fire resistant and that there are clear escape routes from the property are all your responsibilities!

Energy Performance certificates will need to be obtained from an accredited assessor. This certificate is necessary to demonstrate how energy-efficient your property is to prospective tenants, and to allow them to estimate their utilities bills.

Legal Cover and Insurance

A landlord’s best defence is a good relationship with their tenants; if you are easy to contact and reliable, your tenants should be able to keep you appraised of any possible problems and will treat your property with respect. If things go sour, however, you may find yourself in need of legal recourse, which is an expensive and time-consuming process. A good landlord’s insurance policy will cover the costs of lost rent, legal fees and lost income, and is absolutely indispensable before you become a landlord. It’s also extremely wise to conduct a thorough inventory before each tenancy, with photographic evidence. This gives you a much stronger standing if there should be a dispute over who should pay for repairs, and may save you an argument in the future!

Rights and Responsibilities of a Landlord

You should have a good understanding of what’s expected of you, and what you can expect of your tenants. Making a long-term commitment to letting your property without fully understanding the legal rights of both parties is foolish, so do some research before you proceed. As a rule, tenants will be expected to treat your property with respect and deal with any small maintenance issues that may arise and in return you will be expected to leave the tenants in peace, and respond promptly to their requests.

Marketing Your Property

With all your paperwork in place and your property ready to let, it’s time to find some tenants! Marketing your property correctly is key to finding tenants quickly and easily, so make sure your property is properly advertised:

Good photos make or break an advert. Make sure your property is presented in the best possible light by tidying up the place, and take photos of everything a tenant would want to see. If furnishings are included, be sure to include these in your photos as well!

Time your advert to catch the desired tenants. If you’re expecting to let to students then make sure your property is on the market well before term starts!

Listing in multiple places allows you to spread your net more widely than relying on just one agency, though you should check how much each agency’s listings fees are before committing to too many.

Provide a moving-in date that is concrete and reasonable. Most tenants will be looking for a move date 4-6 weeks in advance, so have your property online well in advance of your desired move-in date.

Set your rent at a reasonable level, and be clear about what it includes. Research the market to find out what properties similar to yours are being let for, and set your price in accordance with that.

Provide information on the property’s council tax band and energy efficiency rating so tenants can predict their likely monthly bills.

Respond promptly to requests for information. Tenants are likely to be looking at many different properties so a timely, friendly reply goes a long way towards finding you a tenant!

Hold viewings once the property is on the market, as tenants will want to see their new home before agreeing to a contract. To ease the strain on you, set a schedule for viewings and allocate times as requests come in. If there is a lot of demand, try and combine viewings so you get the best exposure for your time!

Choosing a Tenant

Now that you have a group of interested tenants, you’ll need to choose the ones that will be the most reliable – ones with a strong employment and rental history. The best way to establish this is through the use of tenancy application forms, which are available to download in numerous different forms online. This requires tenants to supply their employment status and salary and previous landlord’s details as well as their own phone number and address. Choosing a tenant with a good track record should ensure that you’ve found someone who will treat you and your property with respect.

Beginning the Tenancy

You and your tenant should now come to an agreement on the terms of the let. You’ll both need to sign a “Tenancy Agreement” which outlines the rights and responsibilities of both parties and legally binds both to abide by the terms of the contract. Some key parts of the tenancy agreement are:

Tenancy Start and End date – when the contract begins and how long it lasts for

Rental amount and payment periods – how much, and how often

Named Parties – who the agreement is between

Expected behaviour – binds the tenant and the landlord to behave in a reasonable manner throughout the tenancy.

To get a thorough understanding of how your tenancy agreement is structured you should read our article on “Understanding Your Tenancy Agreement”; this lays out in more detail the different clauses present in the contract.

Though it’s not legally necessary it’s highly advisable to conduct and present an inventory to the tenants. This should be current, with dated photos of all furnishings and fittings, as it’s your first line of defence should there be disputes over damage during the tenancy.

Before moving in, your tenant will need to provide a security deposit, which you are legally obliged to secure in a government-approved scheme such as the Deposit Protection Service. This can be any amount you choose, but is usually between 1-2 months rent. The tenant’s deposit will be reclaimed at the end of their tenancy, but if you’re forced to clean up after them when they leave you can deduct the costs of this from the repayment.

During the Tenancy

Most of the time, you’ll have little to do as a landlord whilst your tenants are in occupation, but you should make sure you’re easily contactable should there be an issue. Maintaining a good relationship with your tenants is key to a smooth tenancy so be reliable, polite and respectful, and they should treat you the same. Though you shouldn’t be intrusive, it’s good practise to inspect the property every 3 months to check that everything’s in order – don’t forget to get your tenant’s permission before showing up, though!

At the End of the Tenancy

When your tenants decide to move out, they are responsible for leaving the property in the same condition in which it was first let. If, after leaving, there’s still a lot of cleaning to be done, you can deduct the costs of this from the repayment of their deposit, though you will need their agreement to do so. If they dispute any charges you’re making, a good inventory with photographic evidence is your best way to prove that damage has been done!