When you first become a landlord, there's a lot to get your head around.
To help you out, here are some valuable pointers. This guide walks you through the key issues, including understanding the law, protecting yourself from problem tenants, and setting rent at the right level.
When you become a landlord, you have many legal responsibilities, and you can get in big trouble if you don't meet them.
For example, you're expected to:
- Ensure your property is safe to live in
- Make sure that all electrical and gas equipment is installed and maintained safely
- Fit and test smoke alarms and carbon monoxide alarms
- Keep your property in good condition
- Protect your tenant's deposit in a scheme approved by the government
- Provide an Energy Performance Certificate and ensure the property meets new MEES rules
- Give your tenants at least 24 hours' notice before accessing the property to inspect it or carry out repairs (unless it's an emergency)
- If your property's in England, check your tenant has the right to rent
- Pay income tax on the rent you take in (minus any day-to-day running costs)
- Pay Class 2 National Insurance if the work you do in connection to letting your property is classified as running a business.
So that you don't accidentally end up on the wrong side of the law, it pays to spend time reading up on your responsibilities as a landlord.
Be wise when setting your rent
Knowing how much to charge tenants for your rental property can feel like a minefield. Go too high, and you might struggle to attract tenants; go too low, and you could lose out on potential income. There are some key factors you'll need to consider when you're setting your rent. They include:
- Location - The area your property is in will impact how much you can charge. This includes proximity to local amenities, schools, transport links and recreational facilities.
- Type of tenants - Your pricing will, in part, be determined by the people you're trying to attract. For example, professionals tend to be prepared to pay considerably more than students.
- Features - Selling points like off-street parking and outdoor space can increase the appeal of your property and mean you can charge more.
- Condition - The condition of your property inside and out and whether or not it comes furnished will impact the level of rent you can charge.
Take a look around
When deciding how much to charge, always look at what other landlords in your area charge for similar properties. Popular property websites like Zoopla and Rightmove are good places to start, and you can get up-to-date information from the HomeLet Rental Index.
Ask a letting agent
It's also a good idea to ask a letting agent. When it comes to rental values, they're in the know and can provide you with accurate information and advice.
Take steps to protect yourself
Most tenants pay their rent on time and take good care of their homes, but unfortunately, some can cause problems. From getting behind with their bills to damaging furniture and fittings to being nuisance neighbours, they can be a real headache for landlords.
There are steps you can take to avoid these issues, though.
Use a professional tenant referencing service
Investing in property is a significant financial commitment and selecting the right tenants for the property is crucial. Professional tenant referencing services are designed to meticulously assess an individual's history in terms of their employment, how they've conducted previous tenancies and their finances. This is to help ensure that your prospective tenants are in a solid position to maintain rent payments for the duration of their contract and allow you to make a more informed decision about the tenancy. An investment in quality checks before you let the property can make all the difference to the success of the tenancy.
Have a written tenancy agreement
Tenancy agreements set out the rights and responsibilities of both landlords and tenants. By signing one of these documents with your tenants, you can ensure that both parties understand what they can and can't do. This can help to avoid confusion further down the line.
Conduct regular inspections
Arranging regular inspections of your property (making sure that you give your tenants plenty of notice) should help you spot any problems before they escalate. For example, if you notice too much condensation in the bathroom, you could remind your tenants to open the window momentarily every day to stop mould from growing.
You can also look out for signs of damage that show your tenants may not be treating the property well. Identifying these issues sooner rather than later can save you major hassle, stress and expense in the long term.
Get suitable landlords insurance
There are risks associated with being a landlord. From an unexpected loss of rental income to damage done to your property or possessions, you could experience various problems. By taking out the right financial cover, you can ensure that you won't be left counting the cost even if the worst does happen. As well as buildings and content insurance, landlord insurance can include emergency assistance cover and legal expenses protection.
Consider rent guarantee insurance
Even the most conscientious tenants can sometimes become unable to pay their rent. In many cases, a change in circumstances outside a tenant's control can impact their ability to pay the rent. As a landlord, any missed rental payments could affect your income or risk your ability to make mortgage payments for your buy-to-let investment. Typically rent guarantee insurance covers unpaid rent while your tenants are still in the property, the cover for the cost of repossessing the property and an element of cover whilst the property is still unoccupied after vacant possession has been obtained.