If you’re thinking of becoming a landlord for the first time, or have acquired a property that you want to let out, follow these useful top 10 tips to help you on your way.
1. Do your research
Assess the suitability of the property. If it's located near a university, then it might be better for student tenants. If it's located in a semi-rural location near a good school, then you might want to consider marketing your property towards families.
Check out websites such as RightMove, and review local newspapers to get an indication of the value of rental prices that are being asked for at similar properties.
A landlord who is renting a property with more than four tenants will also need to get in touch with their local council to check if they need to register for multi-occupancy.
2. Take out suitable insurance
Many landlords are unaware that specialist landlords insurance is needed to cover rented properties. General home buildings and contents insurance is not usually adequate to cover third party risks. Having specialist landlord insurance ensures that you limit your exposure to risk, and therefore protects your financial wellbeing.
3. Advertise for a suitable tenant
Look for tenants on reputable websites. If the landlord is looking for student tenants, it’s best to contact the student union who will often provide students with a list of suitable accommodation. Another alternative is to ask around at your place of work, once word gets around a landlord may quickly find himself or herself inundated with calls.
4. Choose and check the suitability of the tenant
In the current rental market, the landlord may find that they have to choose from at least five tenants. In this instance the landlord may resort to what is becoming an increasingly popular option; the sealed bid. Once the tenant has been chosen the landlord should check their suitability through a tenant reference.
5. Agree the terms of the tenancy
Before the tenant moves in, the landlord needs to agree with the tenant the terms of the tenancy. It’s best to agree this in the form of a written tenancy agreement, setting out the terms and conditions of the tenancy in detail.
Tenancies can be for a fixed term (usually 6 or 12 months), or extend onto what is called a 'rolling' tenancy. With a 'rolling' tenancy, the contract essentially renews on a month by month basis, so it's worth remembering that you will still need to serve the tenant notice if you wish to take back possession of the property. It’s best to have a written tenancy agreement setting out the terms and conditions of the rental agreement.
6. Have photographic evidence
Whether the landlord decides to let out the house furnished or unfurnished, it’s important to have a record of the state of the property when pre-let. One way of recording information is to create an inventory by taking photos which can be supplied to the tenant to help avoid disputes.
7. Place tenants' deposits in a reputable deposit scheme
Under the 2004 Housing Act, all deposits have to be paid into a deposit protection scheme within 14 calendar days of receipt by the landlord.
8. Agree on property maintenance with the tenant
Before they move in, the landlord should discuss with the tenant who is responsible for any property maintenance or repairs, such as mowing the lawn. It’s also useful to discuss with the tenant the arrangement for emergencies. If you have home emergency insurance in place, it might be worth having your tenant added as a named contact so that they can arrange a claim directly should you be unavailable.
9. Improve the property’s energy efficient rating
Take advantage of government funding to make the property more energy efficient. This will make your property more attractive to tenants. To find out if you’re eligible for the Landlord’s Energy Saving Allowance (LESA), check on directgov.
10. Consider taking out rent guarantee insurance
Consider whether you need rent guarantee insurance to protect yourself should your tenant fail to pay their rent. If you rely on the rental payments to pay your mortgage, then consider it a form of mortgage payment protection. Dependent on the level of cover, a rent guarantee insurance policy will cover not only the rental arrears, but the legal costs involved with evicting a tenant.