Many homeowners are becoming landlords as the housing market slows and they struggle to sell their property. Being a landlord is a great way to generate extra income, but it’s not a good idea to rent out your property without first doing some research.
You should know what your obligations are as a first-time landlord and how to get ready for your first tenants. Read on for some advice on what you must do before you rent out a property to protect yourself and to maximise your income.
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Be prepared!
Don’t invite any potential tenants to view the property until it’s 100% ready – this means finishing any DIY jobs and cleaning it up properly. It doesn’t look good if it’s still in a transitional stage. You also need to decide whether you’re going to let it furnished or unfurnished. If you’re providing “contents” as well, you need more insurance cover.
Make sure you have complied with gas, electricity and fire safety regulations. This must be done before your tenants move in and you must also make regular safety checks, keeping records to protect your tenants. Your insurance may be invalid if you don’t carry out regular safety checks, so it’s doubly important to keep on top of this.
If you have a property that you hope to let to five or more individuals, who will be expected to share toilet, bathroom or kitchen facilities, you will require an HMO licence. When you set about converting any building into HMO accommodation in England and Wales, ensure that you talk to your local council regarding the necessary licence. Landlords in Wales will also need to register with Rent Smart Wales.
Letting agent
You may choose to use the services of a letting agent if you feel you won’t have time to manage your rental property yourself. It is useful getting someone else to manage the day-to-day strain of renting out your property, but they will take on average between 8% and 15% of the profit from the rental income.
They will help you to find suitable tenants, but it’s advisable to remain involved with the selection, as you need to have tenants with whom you feel comfortable. Ask around to make sure you’re getting the best deal from your letting agent. It’s advisable to have your letting agent run a credit check on potential tenants to make sure they can pay the rent and don’t have any skeletons in their closet.
Landlord and tenant rights
Familiarise yourself with your obligations before becoming a landlord. For example, if you wish to enter the tenant’s home, you must give them a minimum of 24 hours’ notice – you can’t just turn up when you feel like it because you own the house.
You need to draft a tenancy agreement to protect your rights as a landlord and your property. It’s advisable to employ the services of a solicitor if you are a first-time landlord. You will need to include a list of terms and conditions that will cover every aspect of the tenancy.
It’s important to make it clear who’s responsible for the maintenance of the property, including the decorating and the gardening. The tenancy agreement should also detail, in writing, the length of the tenancy and the notice periods – both for you to evict the tenant and for the tenant to hand in their notice and leave your property.
Deposit
Always get a deposit to protect against any damage. Since April 2007, as a landlord, you must register your tenants’ deposit with a Tenancy Deposit Protection scheme. The usual amount of the deposit is between four and six weeks’ rent.
Before the tenants move in, make a detailed inventory of the property. This includes the condition of the property and the fixtures and fittings, if it’s furnished. This way, you have proof of the state of the property when the tenant moved in. It will come in useful should there be any damage, or if there is a dispute over paying back the deposit.
Insurance
Take out the appropriate level of landlord insurance cover. Standard house insurance policies won’t provide the level of protection you will need as a landlord. Your policy should cover all kinds of tenants including professionals, students and those claiming benefits.
It should also cover periods when your property may be unoccupied, providing alternative accommodation, accidental damage, dealing with leaks, legal expenses and rent protection.
Nuisance tenants
The majority of tenancies go without a hitch and end at the term of the tenancy agreement. On the rare occasion that you might fall victim to nuisance tenants, you may need to launch eviction proceedings. You will require proof that your tenants have broken the terms of their agreement.
You can start eviction proceedings if they are in rent arrears of more than eight weeks. This is done using a Section 8 notice, which is legally binding. Although no-one wants an eviction wrangle, it pays to be prepared in the unlikely event that your tenants create problems.
The biggest mistake a new landlord can make is not being organised. Keep proper records of everything, including revenue and expenses, so you can see how profitable your property is after a period of time. Learn by experience and don’t leave anything to chance.
Furniture Pack Solutions can help first-time landlords – our high-quality buy-to-let furniture is ideal for local authorities or private individuals. For further details, contact us today.