Tips For New Private Landlords

I recently got an email from someone asking me what my tips would be for a newly born private Landlord that is in the process of kicking her letting agent to the curb. Here’s, in my opinion, a generic list of principles which i’d consider “good to know” for new private landlords.

Legal Obligations

It’s imperative that landlords keep on top of their legal obligations and follow each obligation as required. Obligations like gas safety checks are vital. Ignorance of the law is no defence, unfortunately, and you’ll still liable for prosecution failing to keep inline with the law.

Resources
Landlord Obligations- the law

Referencing Tenants

Getting good tenants is the key to a great landlording experience. A good tenant will make a landlords life extremely enjoyable. One of the best ways to maximize the potential of getting good tenants is by doing thorough checks on your prospective tenants.

• Get credit checks
• Get employer references
• Get references from current/past landlords

Assured Shorthold Tenancy Agreement

Always, always, always get a contract in place. Shorthold tenancy agreements are there to protect both landlord and tenant.

Resources
Download Assured Shorthold Tenancy Agreement
Tenants Without A Written Contract

Guarantor

A guarantor is someone that will legally take responsibility for any missed payments by your tenant. It’s common for most tenants to use a family member. By law, if your tenant skips payment, the guarantor has to cough up the bill. The guarantor must be legally signed into a contract.

Resources
Tenant Guarantor Form

Tenancy Deposit protection Scheme

By law, every landlord and letting agent that receives a security deposit from a tenant needs to secure the money into a deposit scheme. This scheme has been put in place because in the past there have been many disputes regarding landlords holding back deposits unfairly. The scheme provider will act as a moderator, so there is no confusion.

Resources
Tenancy Deposit Protection Easy Guide
Free deposit protection service scheme

Inventory

This ties in nicely with my previous point about security deposits. The Inventory is a listing of all the contents of a property and a record of the condition of each item. The form is designed to help monitor the condition of the items before a tenant moves in and just before a tenant leaves, so it can be made clear what damages, if any, need to be paid for.

This may prove vital if their is a dispute when it’s time for a tenant to leave. If a dispute about something outbreaks regarding the security deposit, the inventory could be a vital piece of evidence which the tenancy deposit scheme moderators will look into. It’s always a great idea to get an extremely airtight inventory formed.

Resources
Property Inventory Form
The Importance Of An Inventory

Rent Guarantee And Legal Expenses Insurance

This is a service becoming more commonly used by landlords as more people are becoming strapped for cash. Rental insurance ensures that the landlord receive rent if the tenant fails to pay. They also cover legal expenses E.g if you need to evict your tenant.

I actually paid £100 for one year’s rental insurance. Oddly enough, that year I had to evict a tenant because she failed to pay 2 months worth of rent. The insurance company took her to court and reimbursed my lost rent. However, they did take an excess fee, but it was well worth it.

I’m not entirely sure how much they cost now, but a policy is well worth having in place if you’re not entirely sure about your tenant. If everything goes smoothly after the first year, it’s unlikely that you’ll need to take the policy out again for that tenant.

Resources
Rent Guarantee And Legal Expenses Insurance

DSS Tenants

DSS tenants are tenants that are receiving social benefits to contribute towards living expenses. They’re swarming the market like a virus at the moment. And I don’t mean that in a bad way, I just mean they’re multiplying quickly, and they’re struggling to find tenancy as a lot of landlords and letting agents refuse to deal with DSS tenants. So it will be likely that as a private landlord, you will get approached by a DSS tenant.

DSS tenants are rightly or wrongly so, notorious for being problem tenants. On that note, please be aware of the implications that come with DSS tenants. They often base their sales pitch around the fact that the government pay their rent, so payment is guaranteed. I beg of you not to be so naive. If that were the case, letting agents and landlords wouldn’t refuse them.

Resources
DSS Explained
The Positives Of DSS Tenants
The Difference Between DSS Tenants on Housing Benefit (HB) And DSS Tenants On Local Housing Allowance (LHA)
Tips For Taking On DSS Tenants
DSS Tenants And The Shitty Council

Tax on Rental Income

Any net profit made from rental income should be declared to the tax man. Renting out property is considered a business, even if the landlord hasn’t registered a company. The profit should be taxed as normal income tax.

Rental income is tax deductable against expenses. So anything like maintenance or letting agent fees is tax deductable, so keep receipts for EVERYTHING, even minor fittings like a light bulb. It all adds up, seriously.

Resources
Tax On Rental Income Explained

Don’t get too friendly with tenants

Letting a property to a tenant is purely business, it should never be about anything else. If you get too friendly you’ll lose focus and when it comes to the time where you’re forced to make a tough decision, you’re going to struggle.

“It’s nothing personal, it’s purely business”, Keep telling yourself.

I once got too friendly with a tenant and it became a nightmare. She rang all the time asking for all kinds of ridiculous favours, and started getting extremely relaxed about certain issues. I now keep my distance and try to remain as formal as possible.

Resources
I’m Guilty Of Becoming Too Friendly With My Tenants

Inspections

Landlords are entitled to perform property inspections every so often. It’s vital that a landlord does routine inspections on a regular basis. I perform inspections on a quarterly basis. There should be something about this stated in the tenancy agreement, stipulating that the landlord has the right to perform an inspection prior to giving 24 hours notice.

If your tenant is growing weed in your loft, it’s probably best if you find out about it sooner rather than later.

Resources
It’s Important To Inspect Your Buy-To-Let Property

Communicate through formal letters

In the past I’ve had to evict a tenant, and the case nearly got taken to court. While preparing my case I realised that my case wasn’t as strong as it could have been because I couldn’t prove much. The majority of conversations I had with my tenant were over the phone, so it was basically my word against hers.

I’ve learnt my lesson now, consequently, I make sure 99% of decision making and agreements are document through letters. For example, if your tenant requests to change the carpet, and you don’t want them to, write back saying “NO”.

If at a later date, you find out your tenant has gone against your word, you have a case. I advise sending the letters by recorded delivery, so there is proof of receivership.

File everything away neatly

For the first for years, my paperwork was all over the place, and it became a nightmare when I actually had to find any documentation. After years of torment and absolute chaos, I decided to implement a filing system.

I now have filing cabinets for each property. With in each cabinet, I have separators for each core subject E.g mortgage, contracts, insurance, expenses..etc. Everything is filed away neatly so I can access anything I want pretty efficiently.

Implementing the filing system took hours of frustrating labour. Do it from the word go, and you’ll save yourself from a world of pain.

Set up a direct debit

I don’t like chasing tenants around for cash, and I despise waiting for cheques. I always insist that tenants setup a direct debit, so I’m paid on the same date every month directly into my account. That way there’s no waiting around. I’ve found that cheques are a bit of a liability because tenants can easily use the line, “the cheques in the post”…when it really isn’t.

Don’t hand over the keys to the tenant…

…until contracts are signed, references are checked and you have the deposit and first months rent. I’ve had tenants on a number of occasions say, “I want to move some of my belongings in over the weekend, and so is it ok if I pay my deposit on Monday when the banks open?”
The answer should always be “NO”. Once a tenant is in your property, they automatically have statutory rights which will keep them in there, regardless of whether they have paid.

Spare keys

Always have spare sets of keys to ALL doors and windows. I generally keep 2 spare sets for each property and I give the tenant one set.

Did I miss anything out? You got anymore advice? Let me know and I’ll update my list!

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Talk / 4 Comments left so far

Simon Bayliss wrote this on 2009-02-15 23:57:54 With regards Landlords going private your advise is extremely good. As an agent for many years I certainly believe that with low returns more Landlords will convert to privately managing. I have started an internet based agency in Oxford partly with the idea of offering the private Landlord the best of internet advertising ie. rightmove, propertyfinder etc. at reasonable cost. While many will be able to deal with deposits, maintenance, agreements & other related tasks many will not have access to the advertising sources that the agents have. As over 85% of propects look on the internet then this is a far better way of promoting a property than a lineage ad in a newsapaper or card in a shop window. Additionally it attacts good quality Tenants. I charge £125 for a succesfull listing by the way. 1

Emma wrote this on 2009-11-25 23:35:54 Hi I really hope you can help, my letting agent has a clause in my contract that says if i wish to sell I can only use them.

This is what is says re disposal of the property:-

16.1 should the landlord wish to sell the property the landlord agrees not to market the property or instruct any agent other than Northwood acting on his behalf to market the property for sale, or to make any arrangements to transfer ownership of the property until this agreement has expired.

16.2 in the event that the landlord acts to sell, to market or to otherwise transfer ownership of the property during the course of this agreement the tenant will immediately stop all payments to the landlord, save that in the event that the tenant is instructed to market the property for sale on behalf of the landlord, then payments may continue at the discretion of the tenant.

please can you help, is this legal. Can I therefore sell it myself (as that way i am not handing it over to another agent).

please please help me.

kind regards emma 2

Simon Bayliss wrote this on 2009-11-26 10:00:42 In short, in my opinion, I would say the clauses would be deemed as unfair terms & therefore unenforceable. Particularly clause 16.2 which seems to suggest that the Tenant stops paying rent (?) if you market the property. Never heard that one before & would in effect put the Tenant in a vulnerable position. Crazy. You do not say how long the current Tenancy agreement is & how long left on it & how long the actual agreement with the agent. Also would it be sold with the Tenant in situ.? The answers to these questions would not though effect my opinion on your dilema. I will say that given this clause seems unfair then check the rest of your agreement for any other 'surprises.' I am sure any Solicitor would win a case on your behalf should it come to that, which hopefully it will not. 3

Simon Bayliss wrote this on 2009-11-26 10:08:49 I will add that instances such as these with regards letting agency terms do us agents no favours at all. Similarly some agents have terms for Tenancy agreement renewals which can cost Landlords hundreds of pounds for little work on the part of the agent. Indeed in charging Tenants quite often for an agreement renewal also it may discourage a potential Tenant taking a property in the first place & lengthen the Landlords void??? The old question I guess- is the Agent working for/ with you or ..................? 4

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