This guide is specifically aimed to help new landlords that don’t want to use letting agents and pay their fees (which can often be extortionate!).
A common misconception is that letting agents provide us with a skill set which can’t be duplicated by the average landlord. We assume that they have an advantage over us by having all the trade tools, resources, local knowledge and all that extensive training they’ve been put through. NOT TRUE. Anyone can be an agent; they have no special qualifications. You can’t honestly tell me you’re surprised.
All agents do is provide us with is a service which we don’t know enough about to confidently duplicate. But when you break it down and walk through the steps, it’s really not that difficult or time-consuming to learn the essentials, which is what my step-by-step guide below will demonstrate.
Letting Agents charge between 8%-15% of the rental rate for their services. They’re expensive. Additionally, the landlord has to meet legal obligations, such as acquiring Gas Safety Certificates and Energy Performance Certificates. Acquiring those products through a letting agent can be the expensive method because agents usually add their own markup. So it quickly becomes easy to see how being a landlord can be expensive when using a Letting Agent. However, their fees can be avoided, and that’s simply by taking the letting agent out of the equation. It’s not as difficult as it sounds.
The information below is a step-by-step guide on how a landlord can independently be a landlord without the aid of a letting agent.
1. Make sure the property is legal and in working order
- Ensure property meets all Electrical Safety obligations.
- Ensure the property has a valid Gas Safety Certificate is in place
- Ensure the property has a valid Energy Performance Certificate (EPC) is in place
- Ensure the property has a valid buy-to-let Landlord Insurance policy
- Check that all doors and windows lock properly
- Check that everything you provide with the property is in safe and working order
Aside from the non-obligational procedures that any Landlord with a bit of common sense would pay attention to, it’s important for the landlord to meet all legally required obligations. These are all necessary obligations; failing to comply with these could result in prosecution. Here’s a more detailed and up-to-date list of Landlord Obligations / Regulations – The Law
2. Make the property presentable
In this current market, with an oversupply of BTL properties, renters’ are spoilt for choice, so it’s crucial to make your property as appealing as possible, just to help shake off the competition.
3. How much rent you should charge
I see a lot of landlords make this mistake; they have unrealistic expectations and end up asking above the odds. It’s an expensive mistake to make because it could mean the property remains vacate longer than it has to be, which will effectively cost more than having a realistic asking price in the first place.
Landlords commonly overprice their properties because they put their heart and soul into getting a property ready, so they put a value on their blood, sweat and tears, which gets passed onto the asking price. In reality, tenants won’t care how or why a property looks the way it does, as long as it looks acceptable to their standards.
Bottom line, put a realistic and competitive asking price on your property. That means, don’t under or over price your rent. Here’s a guide on how landlords can find out how much rent you should be charging.
4. Know your property
I know this point seems stupid, but it’s amazing how many small, yet important details are unknown by the landlord about their own property.
The following information are just examples of what details you should be aware of, so you can pass on the details to your tenant, or letting agent (depending on if you use a letting agent or not).
- What council tax band the property is in
- How much the council tax is
- What day the garbage is collected
- Which companies are currently supplying the property with gas & electricity, water and the telephone line
A more detailed guide on the issue: Know The Specifics Of Your BTL Property
5. Think about what kind of tenants you want
They’re the sort of details prospective tenants will expect to see in your advertisements. You need to be clear about what you’re looking for in a tenant, or more specifically, what you will accept.
The important factors to remember is that;
- the more filters you apply, the less enquiries you will generate, because each filter will automatically make a certain group of tenants illegible
- the less filters you apply, the greater the risks. For example, pets and smoking may cause damage to the property
6. Market your property to find tenants
There are tonnes of ways landlords can market their property to find tenants. Some of the better methods of marketing require a small budget, but there are plenty of free options.
For a comprehensive guide on how to find tenants efficiently and cost-effectively, go to the Finding Tenants Guide
7. Take viewings
During the viewing be sure to discuss all relevant information:
- Show tenants the Energy Performance Certificate (EPC)
- Discuss how much rent is, and the options of how rent can be paid (What’s The Best Way To Collect Rent? )
- Discuss who is responsible for bills e.g. council tax and utility
- Make it clear when the property is available
- Discuss how long the tenancy is for
- Make it clear that a guarantor is required
- The deposit required
8. Tenant Referencing
Once the offers start flowing in, get all the relevant information from each prospective tenant which seem the most promising options before committing to any one candidate:
- Current/past employment status
- Rental history
- Reference details from previous Landlords
- Credit Check
Here’s a full guide on tenant referencing.
9. Pick the winner
Use your own intuition based on the references and the face-to-face encounter to determine which tenant is most suitable for the property.
I generally use the following pyramid diagram as a tool for assistance, The Best And Worst Tenants
10. Make Arrangements
Call the lucky applicant and confirm the arrangement. Agree on a moving in date, and arrange a time to meet at the property.
Remind the tenant that the deposit and first month’s rent is required to be paid by move in day. Arrange how the payment will be made. Also, discuss the arrangements for a Tenant Guarantor. Ideally, the Guarantor will sign the agreement before move in day.
11. Prepare the documents
I always use/provide the following documents with every tenant:
- 2 x Tenancy Agreement
- 3 x Tenant Guarantor Form
- 2 x Property Inventory Form
- 1 x copy of the Gas Safety Certificate
- 1 x Right-to-rent booklet
12. Meet the Guarantor
Meet and greet the Guarantor so they can fill in the Guarantor Form and sign it. Make sure they’re aware of their responsibilities.
Ensure you have 3 sets of keys to the property. Keep two for yourself and one for your tenant.
14. Make a confirmation call
A few nights before move in day, call the tenant and confirm everything is still as planned.
15. Move in day
Meet the tenant at the property with prepared documents. Don’t hand over keys until the inventory is completed together, the contracts are signed and first month’s rent and security deposit have been paid. It’s important not to do the inventory BEFORE the tenant moves in, because damage is notoriously caused when furniture is being transported into the property. Only then hand over keys and allow for their belongings to be moved in.
At this point it’s important to refer to point #1 in the list (i.e. following landlord legal obligations and regulations), because some things need to be done either before your tenant moves in, or on the day they move in (e.g. checking smoke alarms). I’ve put together a compliance pack for new tenancies which will help you meet your legal obligations for new tenancies!
16. Perform a comprehensive tour
Show the tenant the important specifics:
- Where the fire alarms are located
- Discuss the areas which were revised (point 3)
- Explain how the hot water and heating work
- Explain how any electrical items that come with the property work E.g. white goods
17. Contact details
Exchange contact details so it’s clear which is the best way to get in touch with one another.
19. Content Insurance
Remind the tenant that the building insurance only covers the building and not content. It’s their responsibility to get their content insured.
19. Tenancy Security Deposit
The deposit should be secured in a Tenancy Deposit Protection Scheme with in 30 days of receiving the deposit. Get that shit arranged ASAP!
20. Landlord Rent & Legal Insurance
I don’t ALWAYS get Landlord Rent Guarantor Insurance, but if I do, i’d do it at this point.
These insurance policies covers any rent losses if tenants fall into arrears. Additionally, if the tenant runs up any legal costs (e.g eviction costs), then the insurance company will pay for it.
21. Landlord Building Insurance
Buy-to-let home insurance is NOT the same as regular home insurance. So ensure you have the right type of insurance policy in place for a rental property, otherwise your policy can be deemed void.
If you currently have a landlord insurance policy in place, inform building insurance company of new tenants and update their records. Failing to do so could make your policy void!
22. Registering the new arrivals
Instruct the tenant to inform the following that they’re the new residents of the property:
- Council tax Office
- Gas & Electricity company (they’ll also need meter readings at hand)
- Water company (they’ll also need meter readings at hand)
I personally contact the suppliers myself to ensure the new tenant’s registered as the new occupants! I recommend for all landlords to do this. I’ve heard of too many cases where tenant’s don’t do it, and it causes all kinds of billing issues!