Becoming a first-time landlord
Becoming a first-time landlord can be a little daunting since there is so much to consider. In the current market, it’s even more important that you do your homework to ensure the best chance of success. You need a strategic approach that includes setting competitive rents, screening tenants diligently, and understanding your legal responsibilities.
But the benefit is that with demand currently outstripping supply, there are plenty of tenants out there who will be looking for a property like yours. Here are some tips to consider that will help you to better navigate the rental market as a first-timer.
Understand your legal responsibilities
As a first-time landlord, you must comply with several legal requirements. Many of these are health and safety related, while others pertain to the financial side such as the proper handling of deposits.
The health and safety requirements boil down to providing a property that is safe to live in. That includes fitted and regularly tested smoke alarms on each floor of the living accommodation and carbon monoxide detectors in any rooms that have a fixed combustion appliance and are lived in.
At the start of their tenancy, you will need to provide tenants with a copy of an Energy Performance Certificate for your property with a minimum E rating (unless you have been granted an exemption) as well as an EICR (electrical installations condition report) that shows that all electrical installations are safe and in good working order. You need to provide a new EICR at least every five years. A gas safety certificate must be provided at the start of the tenancy and annually thereafter.
Deposits must be protected in a government-approved scheme, some of which directly hold the money and others which insure it. You will also need to provide tenants with a written tenancy agreement that clearly states the rights and responsibilities of both parties. This can be supplied directly by you or by a letting agent working on your behalf. It should also include a full inventory which you will need to check against before you refund the deposit when a tenant moves out.
Set competitive rents
Rents are at record highs currently, driven by the huge demand for properties. Look at the current market and speak to local agents about current rental rates in your area. Resources such as the HomeLet Rental Index can also be a helpful guide as to what to charge. Fair and reasonable rates not only help you to attract tenants but will also ensure they can comfortably afford the rent and aren’t likely to fall into arrears.
Screen tenants diligently
One of the best ways of protecting your property and investment is by letting to tenants that you can trust. But how do you do that when you don’t know them from Adam? Diligent screening can help to identify fraudulent tenants as well as those for whom affordability may be an issue. Tenant referencing services will check applications against several data points, assessing everything from employment history to previous landlord references to minimise the risk. You also have a legal obligation to carry out a Right to Rent check which ensures that your tenant is legally allowed to rent in the UK.
Protect yourself from risk
Tenants are likely to look more favourably at landlords who belong to an accreditation scheme, such as the National Residential Landlords Association or the Guild of Residential Landlords. They also offer landlord training and support, so are a great resource for a first-time landlord.
Another of your requirements in your first role as a landlord is to give your tenants a copy of the government’s How to rent guide. This must be given to them at the start of a new assured shorthold tenancy. Although it is a document for your tenants, it’s also a great checklist for you to ensure you’re fulfilling all your obligations.
Letting a property isn’t without risk, especially if it’s your first time. Protecting yourself and your tenants is essential, and you need to prepare for the unexpected. Even with the most rigorous of tenant screening processes, circumstances can change. Your tenants may find themselves falling into rent arrears or causing damage to your property. Perhaps an accident in your property could become your liability. Protecting yourself with Landlord Insurance is as important for a fledgling rental business as an established one. There are many insurance products out there, such as Rent Guarantee Insurance that are designed to protect you, your business, and your property investment.
HomeLet is one of the UK’s largest tenant referencing providers and has referenced more than 13 million tenants over the past 30 years. Our referencing products are available to all letting agents who work in partnership with the business. HomeLet’s Landlord Insurance also helps to protect your property and investment.