The Accidental Landlord Guide 2018

Accident

Oooooh shhhheeeeeeet. You didn’t plan for this to happen, but it has. You’re one of us now (or at least, on the verge of being one of us)!

I’ve always found the meaning behind the term “accidental landlord” a little ambiguous, because I’m not really sure what kind of landlord qualifies, other than one that has unexpectedly fallen into the trade through unforeseen circumstances, as opposed to intent. But WHY?

I largely suspect it involves one of the two following scenarios (please, tell me if you fall into an entirely different barrel of monkeys):

  • Econimcal circumstances have forced you into letting your home
  • You’ve inherited a property
  • Change in marital status

I guess it doesn’t really matter why you’ve been lumbered with the ‘accidental landlord’ job title, the point is you are one- and that means you need to get up to speed. Pronto!

According to this article by the Business Reporter, around 1 in 12 (8.2%) homes that came onto the rental market in 2017 were by accidental landlords- equating to around 80,000 properties across Britain.

GOD DAYYYAM! That’s a lot of folk being blind sided by unforeseen circumstances. But on the bright side, at least you’re not alone. There’s an army of you roaming the streets.

Naturally, it’s the new and first-time landlords that usually trip over the hurdles and learn the hard way. And yup, while the steep learning curve is unavoidable – no matter how much research you endure – there is definitely perks to grinding through the mundane homework in order to substantially minimise risk.

As part of my build-up to writing this blog post, I briefly looked through several high-ranking articles on Google, offering advice to accidental landlords. Now, I don’t want to be the venmous bitter asshole, but I’m inclined to believe that they weren’t written by actual landlords, because while they covered a lot of the basics, like getting the correct type of insurance (which is, of course imperative, but advice even my docile Nan could provide), many of the equally as crucial and practical tippets were ghost. Don’t get me wrong, no one can cover it all, but there were way too many holes that need plugging…

1) New landlord guide

First and foremost, I’m going to conduct some utterly shameful self-promoting. But, with impeccable reason.

I’ve already written a detailed guide for new and first-time landlords [free to download], which covers pretty much everything you’ll find in here, plus more! In fact, I think it’s fair to say that everything I’m going to spew out on this page is a watered-down version of what’s contained in the book. So, downloading it should be your first port of call, or at least you’re primary objective after you’re done with this page.

It’s received some decent reviews, so make of that what you will.

2) Landlord Building Insurance

I know, I know!

In my brief intro I mentioned that getting the right type of insurance is basic advice, but I also said it was crucial, and that’s why I need to mention it (along with the forthcoming tippets that generally go unsaid by other publishers).

Building insurance isn’t a legal requirement, but you’d be a fool not to have a suitable policy in place, because ya’ know- otherwise you’ll get sweet bupkis if your tenant burns your house down.

If you currently have a standard ‘residential’ policy, contact your provider and get it updated to a policy suitable for buy-to-lets! If your rental has a residential policy, your policy will most definitely be void.

Here’s a full guide on landlord insurance (there are many types of landlord insurance), and a more specific blog post targeting landlord building insurance.

3) Content Insurance

Again, it’s not a legal requirement to have contents insurance, but this one isn’t often required.

If you have a fully-furnished property, then it would be wise to splash out on contents insurance. However, if it’s unfurnished, it’s typically the tenant’s responsibility to get their own contents insurance policy, if they choose to.

4) BTL Mortgage

It’s a similar gig to building insurance; you need a mortgage policy that caters for buy-to-let, and not for standard residential purposes.

You should inform your lender that you wish to let your property (if you don’t currently have a BTL mortgage), and they may need to switch or amend your current policy.

5) Leasehold properties

If you have a leasehold property, it’s important to check if your lease permits subletting (technically, you’ll be subletting if you let a leasehold property). Some leases don’t permit it!

6) Online letting agents

Most new landlords instinctively think using their local high-street agent is the only option to finding tenants. While that was largely the case a decade ago, times have massively changed [for the better]. Online letting agents are the latest craze, so I strongly urge you to look into them if you haven’t done so already.

In a nutshell, online letting agents have digitalised the process of finding and managing tenants for a fraction of what traditional high-street agents charge. For example, I used to pay my local agent £750 to find a tenant, but now now pay around £50 with an online agent. If that hasn’t perked your interest…. then, you’re just weird.

Granted, online agents aren’t for everyone, especially those that want complete isolation from dealing with tenants, but before making that call, I highly encourage you to look through my complete guide on online letting agents.

7) High-street letting agents

Putting aside all the negative press and stereotypes high-street agents are associated with, I’m not adverse to encouraging accidental landlords on using them, especially if you feel completely out of your depth. So if you decide that using a high-street agent is the route you want to take (after reading my guide on online letting agents, of course), then my only advice is to choose wisely.

While I don’t think they’re all snake-oil assholes, many of them are. If not worse. To spare myself from rewriting the traps to be aware of when dealing with agents, I invite you to hop over to my guide on how to choose a good high-street letting agent.

8) Rent

Don’t fall for the trap of being greedy, despite how tempting it might be! Always stick to the going rate, and no more.

Overpricing can easily lead to extended vacant periods (which ultimately costs more than setting the correct price in the first place) and more importantly, bitter tenants.

Feel free to ask local agents what the going rates are, and also utilise websites like Rightmove.co.uk and Zoopla.co.uk to see what other landlords are demanding for similar properties in the same area.

9) Tenancy deposits

You don’t legally have to take a deposit (which many landlords don’t realise), and many [stupid] landlords don’t. But I’d highly recommend taking one.

Landlords typically take one months’ worth of rent as a deposit, or one and a half months’ rent if the property is furnished, or if the tenant has pets.

If you take a deposit, you will be must legally comply with the tenancy deposit legislation (which is also covered in the link I provide in the landlord legal obligations section below).

10) Referencing / Good tenants

This blog post may seem like a chaotic and unorganised list of cautions, but there is some strategy in my ordering. But it’s not ordered by importance, because if it was, this might have ended up at the top of the pile.

Landlords, even the experienced ones, often under appreciate the value and importance in finding good tenants.

New landlords are often like headless chickens, in the sense that they’ll do whatever they can to find any ol’ tenant as quickly as possible to reduce the vacancy period. In theory, yes, it makes sense, because a vacant property is costly. However, in practise, compromising the quality of tenant to reduce void time can definitely be more expensive. For example, leaving a property empty for 2 weeks longer than anticipated because you didn’t receive interest from the right applicant sooner is almost always cheaper than rushing into a deal with an unsavoury tenant who may cause havoc down the road.

My advice is, don’t stop looking for a tenant until you’re confident you’ve caught a good one. If that means prolonging your vacant period, then so be it. Be diligent, and thoroughly reference your tenancy applicants. Referencing is key.

11) DSS tenants

While DSS was dissolved in 2001, it’s still commonly referred to tenants who receive benefits. They come with both positive and negative attributes, all of which I’ve discussed in my guide on tenants that receive housing benefits.

DSS tenants are a controversial topic of discussion, especially in this current toxic climate, where more and more people are relying on benefits.

I don’t want to encourage or discourage anyone from taking on DSS tenants. However, every landlord should be aware of what a DSS tenant is, and what they bring to the table. Before starting your tenant-finding conquest, please, do some homework on DSS tenants.

12) Don’t stop looking for tenants until the bitter end!

This point covers a whopper of a mistake so many novice landlords make, and it can be so devastatingly costly!

For whatever reason, tenancies fall through last minute all the flippin’ time, very similarly to how the sale of a property falls often through, at which point you’ll have to dust off and reset.

On that basis, I urge you NOT to stop looking for tenants until a tenant has signed the contracts, and the first months’ rent and deposit has been paid. Don’t stop even even if you think you’ve unearthed the sweetest of all tenants that’s adamant on moving in – circumstances often change, quickly!

13) Landlord legal obligations

Well, you knew this one was coming.

There are a barage of legal obligations landlords must adhere to, from safety aspects to the administrative duties, all of which I’ve covered in detail over in my landlord legal responsibilities and obligations blog post. Enjoy!

Needless to say, failing to comply with your legal obligations can quickly and easily lead to prosecution. Don’t be that guy!

14) Tenant Vs Lodger

This is a common issue, whereby landlords confuse a tenant with a lodger and vice versa.

While there are a few key differences between a tenant and a lodger, the biggest give away is that a lodger is someone who rents a room in your home and shares living space (e.g. kitchen, bathroom) with you. A tenant is someone who has exclusive rights over a property for a fixed term, and the landlord will not live in the same property.

It’s important to note that lodgers have far less rights than tenants, and this blog post is covering shorthold tenancies only!

If you’re sitting there with your mouth wide-open, just realising that you’ve actually got a lodger- don’t worry, I’ve still got your back. Here you go, jump over to my guide on lodgers.

15) Utility bills

I would never recommend landlords to include the costs of utility bills in the rent. I just think it can get messy and very complicated if shit hits the fan (i.e. excessive heating bills).

On that note, ensure that all the utilities (gas, water, electricity, phonelines, broadband, council tax etc.) are transferred into the name of your tenant(s) and make sure it’s stated in the tenancy agreement that they are responsible for payment of utilities.

I also recommend calling each utility provider to ensure the policy has been transferred, and not just rely on your tenant’s word. That way, in the event that they fall behind on their utility bills, they will be held responsible, not you.

16) Furnished Vs Unfurnished

Personally, I wouldn’t encourage you to provide a furnished rental property, although in some cases I know it’s unavoidable without splashing out on storage. However, if you have the choice, I recommend going unfurnished, because the point to remember is that the more you provide with your property, the more you’re making yourself responsible to repair and maintain. That can be a real hassle, not to mention a black hole for money. I actually think it’s worth paying for storage, or selling the damn lot, just to avoid the potential problems that come with furnishings.

If you’re in the mood to read a more detailed blog post on furnishing (specially why I think it’s a disastrous idea), here you go.

17) White goods

From my experience, most tenants expect white goods to be provided, and it’s difficult to find tenants that are willing to supply their own, which includes – at the very least – fridge/freezer, cooker and oven.

Just to clarify, providing white goods doesn’t mean you’re providing a furnished property.

18) Tenancy agreement contracts

Here, just a couple of my most crucial tips when it comes to tenancy agreement contracts…

  • A tenancy agreement can be a verbal agreement between landlord and tenant. However, you should ALWAYS use a written tenancy agreement so the agreed upon T&C’s are documented to avoid confusion i.e. length of tenancy, rent amount etc.
  • Most tenancy agreements are fixed for 12 months, but I recommend initially using a 6 month fixed period (which is legally the minimum length for an AST). This will allow rogue tenants to be evicted as quickly as possible. If after the initial 6 months you’re happy with the tenant, you can either allow the tenancy to continue without doing anything (the tenant will then roll onto a periodic tenancy), or simply provide a new tenancy agreement with new fixed terms.
  • Read every clause in the tenancy agreement carefully and ensure you understand everything! If there’s something you don’t understand, get advice (i.e. ask the question in the landlord forum)- don’t just blindly use it.
  • Don’t download a random tenancy agreement off the internet because it’s free, ensure it’s up-to-date and sourced from a reputable supplier. Speaking of which, you can download one from here.
  • Don’t just amend or add your own clauses willy-nilly, because they may not be legally enforceable. If you wish to make amendments to your tenancy agreement, I recommend seeking advice from a professional (i.e. solicitor)

For more details, here’s a guide on tenancy agreements.

19) Guarantor

A “Guarantor” is the person that accepts the liability on behalf the tenant in the event of the tenant failing to meet their obligations (e.g. if the tenant falls into arrears). The Guarantor is legally bound to accept the liabilities on behalf of the tenant (i.e. cover the rent arrears). Most commonly, a guarantor is usually a close family member of the tenant.

I recommend for all landlords to ensure that their tenants have a guarantor. In fact, I would insist on it. It’s actually easy to arrange- all the landlord needs to do is reference the guarantor (to ensure they’re suitable), and then get them to sign a contract (similar to a tenancy agreement).

For more information on tenant guarantors and guarantor contracts.

20) Rent Guarantee Insurance

Yup, another another type of insurance. The third in this blog post alone, to be precise.

RGI (Rent Guarantee Insurance) protects landlords against loss of rent. It’s most commonly relied on when tenants fall into arrears, and then the insurance will cover the rent, or at least a percentage of it, depending on your policy.

This kind of insurance is always useful for every landlord, but particularly for those who rely on rent each month to cover the bills. For example, if you know you’ll be in deep shit if your tenant misses two months’ of rent (i.e. you don’t have a contingency to cover it), then it probably makes good sense to bag yourself some landlord RGI.

21) Tax liabilities

To put simply, being a landlord is a business, so that means any profit made is subject to taxation. Almost all accidental landlords will be subject to income tax; that means they’ll need to file a Self Assessment tax return form for each tax year.

The running costs of being a landlord can be a burden on the purse, but the good thing is that many of those expenses are tax deductible, commonly known as ‘allowable expenses’, which includes:

  • Letting agent fees
  • Legal fees e.g. tenant eviction costs
  • Accountant fees
  • Insurance
  • Council tax
  • …etc

Needless to say, safely keep all your receipts!

Bottom line, tax is a real thing when you’re a landlord. For more depressing info on the subject matter, here’s my landlord tax guide.

22) Run it like a business

I ‘spose I’m following on from my previous point with this one, but I do want to provide some extra emphasise on how important it is to run your landlording affairs like a proper business (because that’s what it is). That means having a separate bank account (doesn’t need to be a business account), keep a spreadsheet of all your finances, set yourself reminders of key dates (e.g. when the annual gas safety check is due), and maybe even go the whole 9 yards and file everything away neatly. Might even be worth looking into some landlord software to help assist with the admin.

Believe me, being organised and professional will make life so much easier.

23) Repairs & Maintenance

According to Section 11 of the Landlord and Tenant Act 1985, the landlord is legally obligated to:

  • keep the structure and exterior of the property in good repair, including drains, gutters and external pipes
  • keep installations for the supply of water, gas, electricity and sanitation in good repair and proper working order
  • keep installations for space heating and water heating in good repair and proper working order

Kind of a no-brainer if you ask me, but apparently it’s not (based on how many depressing horror stories I hear from tenants).

More on Landlords responsibility to repair and maintain.

24) Contingency fund

If there’s one thing you can rely on as a landlord, it’s for unforeseen expenses to crop up and bunch you in the nuts, from general maintenance & repairing issues to the financial consequences of having a tenant that’s a pillock! So always have a bit of dosh on the side to cover those expenses.

If you’re the type of person that likes to live from paycheque to paycheque, I’m not entirely sure that being a landlord is well suited to your lifestyle. I can only encourage you to make an exception this once by prepping a contingency pot that can fund the unforeseen circumstances that are, ironically, always inevitable.

Allow me to throw an example your way, just so you have a practical point of reference; in the space of a year I had to replace two boilers, and that set me back £5k! OUCH!

25) Document correspondence with tenants

Use common sense to determine what constitutes as noteworthy, and then be sure to communicate by means that leave behind a footprint (e.g. text messages and emails), so you can call-back on conversations. This is particularly useful for when agreeing to changes in the tenancy, or getting permission to enter the premises to make repairs.

26) Inventory

An inventory is a listing of all the contents of a property and a record of the condition of the property. Always do one! The process of creating an inventory is typically simple- it usually involves taking pictures and taking down notes on a clipboard, and then getting the report agreed upon and signed by both landlord and tenant.

Shockingly, inventories are often side-stepped by landlords, which is just crazy, because they protect all parties, specifically when identifying damages (which is an extremely common reason for dispute). Inventories are crucial when it comes to putting reigns on unnecessary and unwarranted spending.

More on property inventories and how to create one.

27) Tenant’s right to live in “quiet enjoyment”

Yes, it’s your property, but the tenant has the legal right to live in the property as his or her home, therefore entitled to “quiet enjoyment” as part of their statutory rights. That means, as the landlord, you can’t just turn up at the property announced, even for repairs or inspections.

You must give at least 24 hours notice if you wish to enter the property, and it must be convenient for the tenant, otherwise they can refuse entry.

28) Property inspections

Routine property inspections are crucial- they help identify if your tenant isn’t taking care of your property as you would expect, and it also provides the opportunity to flag any maintenance issues, which the tenant may have overlooked e.g. leaks, mould etc.

I recommend quarterly inspections, or at the very least, 2 times per year.

Don’t forget, your tenant has the right to live in quiet enjoyment, so you should properly schedule inspections with your tenant. You can use this inspection template to serve notice.

29) Ending tenancies

Landlords can’t just kick their tenant’s out on the last day of the fixed-term without serving proper notice prior (i.e. the tenant normally requires 2 months notice). There is a protocol to ending tenancies, which must be followed. Here are different ways of properly ending tenancies.

30) Rogue tenants

Ahh yeah, the underbelly of being a landlord.

My theory is, if you’re a landlord for long enough, you’ll eventually have a head-on collision with an asshole tenant (no matter how experienced and thorough you are with your referencing). Most commonly, that will involve a rent-dodger and/or someone that uses your carpet as toilet paper. One or two always slip through the net.

None of the ‘accidental landlord’ guides I’ve scoured through mention the reality of rogue tenants, and that’s pretty alarming, because it’s like a sky-diving instructor not mentioning the risks of jumping out of a plane (even though it’s pretty damn obvious, but you get my point).

I really have no point here, other than to both prevent and prepare yourself for the day! That may entail thorough referencing, insurance policies, and regular inspections (all of which I’ve mentioned). On a sidenote, if the shit has already hit the fan, and you’re at the mercy of a rogue, then you might want to take advantage of this free problem-tenant advice service.

So, there you have it!

That may all seem like a lot to digest, but unfortunately I’ve only just scratched the surface in this blog post, but hopefully I’ve given you some actionable steps, along with some food for thought. If you’re craving more guidance, I can point you in the direction of my landlord guide once again, but also invite you to scour through the rest of my landlord articles.

Finally, I’d like to welcome you to the club! Have fun.

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