This is basically a few tips for upcoming and/or new landlords. There is a lot of responsibility that comes with being a Landlord, and also a lot of risks. Please note that these tips are based on the assumption that the Landlord is not working with a Letting Agency.
1] Know the relevant landlord law
Regardless of whether you’re an experienced, new or upcoming Landlord, it is your responsibility to have knowledge of the law, including legal requirements. You need to stick with in the bounds of the law and cover all necessary safety precautions, otherwise you could face prosecution.
Here’s a list of some of the landlord legal obligations all landlords should be aware of.
2] Be a Landlord, not a friend
Once you become a landlord, you’re effectively running a business. Letting your property is a business venture, so keep it strictly business.
It’s important that you don’t get too close to your tenant by forming a friendship. By all means be nice and respectable to your tenant, but be careful you don’t cross the line. If you get into the situation where you’ve become more than just a Landlord, you’re giving your tenant a window of opportunity to ask for special favours e.g reducing the rate of rent. You may find it hard to say no, and that’s more money out of your pocket.
3] Tenancy Agreement
Make sure you have a suitable Tenancy Agreement that suits your property and needs.
There are many generic Agreements out there, available to purchase online or highstreet shops. Not all of those tenancy agreements will be suitable for your property, so make sure you read the terms and conditions in the agreement before using one.
4] Length of tenancy
Your contract will stipulate how long you want to give your tenant tenancy for. I recommend you keep it to a maximum of 12 months. Don’t get suckered in by 18+ month’s requests.
Firstly, you don’t know what the state of the property market will be in 12 months time, especially considering inflation and rising interest rates. You may need to increase your rental price by next year, and you may not be able to if you have a long term contract.
Secondly, if you’re renting your property out to an unsatisfactory tenant, you don’t want them in your property longer than they have to be.
5] Choosing your tenant carefully
Be extremely cautious when choosing your tenant. In an ideal world we would all rent our property out to people we know and trust. But that’s rarely ever the case. Whether you get an external agency to recruit a tenant or whether you find someone yourself, make sure you do reference and credit checks.
The agency should do a check for you as part of their tenant finding package. However, if you’re looking for a tenant privately, here’s a List Of Tenant Credit Check Services For Landlords.
6] Gas Safety Certificate
By law, all gas appliances that come with the property must be inspected annually by a Gas Safe registered Engineer. If every gas appliance is deemed safe by the engineer, you will receive a Gas Safety Certificate (which is legally required before being able to let your property).
7] Realistic Rental Income
Set a realistic rental income. If you’re unsure about how much to charge, then do some research. Find out what other Landlords are charging by finding similar properties for rent in the same area. Best place to look is your local paper or letting websites. Remember, it’s better to have a tenant paying a modest rent than to set a high rent and have your property remain vacant. It should be stated in the contract how much, when, and how you will receive your rental income.
8] Landlord Legal Advice
If you ever need legal advice as a Landlord, you should go to appropriate organisations that specialise in the field. A good place to start is your local Citizen’s Advice Bureau. They will provide you with free legal advice.
9] Keep a rent book
Keep a rent book so you have a record of how much was paid, and on what date. Providing your tenants with a receipt after each payment is also good practise.
10] Document everything and use recorded delivery
Whenever you and your tenant agree on anything, document it with both parties signatures. Keep a copy of everything, as well as providing your tenant with a copy. If you mail anything to your tenant, make it recorded delivery. You’d be surprised about how many people will deny receiving letters that they actually did.
11] Security Deposit
Make sure you get an appropriate security deposit. The security deposit will cover any damages the tenant leaves behind when vacating your property at the end of tenancy. The amount is typically equal to the monthly rental rate. The contract should stipulate more details regarding the security deposit.
By law, deposits for a Shorthold Tenancy Agreement must be secured into a Tenancy Deposit Scheme.
12] You don’t need to use a letting agency
Most novice landlords will automatically use a letting agent to find and manage tenants because they don’t necessarily know any better. Unfortunately, Letting agents charge a lot of money for that service, when actually, a landlord can do it himself.
This is just a friendly reminder that landlords can find tenants without using a letting agent, easily and at extremely little expense. Here’s a full guide on Finding Tenants and Managing a Buy To Let Without A Letting Agent
13] Try To keep Costs down
As i’ve already mentioned, you’re running a business, so you need to try and keep your overheads to a minimum. There are tonnes of ways a landlord can reduce costs. One of the most practical practices is to always get quotes. For example, when you’re looking for a plumber to do a gas safety certificate, shop around for quotes. I’ve seen prices range from £50 – £100.
Let’s not forget, there are also plenty of free services for landlords that many landlords don’t realise, and consequently end up paying for.
14] Tenants have rights
Remember, tenants have rights, which they’re entitled to. Some times it’s difficult for a landlord to digest that while a tenant is legal occupier of their property, the landlord cannot step into their property without permission from the tenant. This also applies if a tenant is in breach of contract e.g. fallen in arrears. It seems unfair, but that’s the law, for now.
If you ever want to repossess your property from your tenant because they’re in breach, you need to evict your tenant legally, to avoid prosecution.
15] Minimize your risk
Being a landlord is risky; fortunately there are plenty of ways a landlord can minimize their risk. For example, putting a Tenant Guarantor in place is one way to gain extra protection if a tenant falls into arrears. Another way of minimizing risk is by getting Landlord Rent Insurance.