Tips for a successful letting experience for Landlords
People become landlords for a variety of reasons, either purposefully buying property with the intention of letting, or unintentionally stumbling upon the role, possibly through owning a property they are forced to let because no buyers are forthcoming or inheriting a property that already has tenants. If you are a landlord, whether by accident or design, the experience can seem daunting, so it helps to familiarise yourself with the legal and practical obligations of the letting market. Below are some tips to help maximise the success of your letting experience.
Check the property’s rental potential – If you are planning to enter the letting market as an investment, it pays not to do so blindly. Before you buy a property, do your research to ensure the area and the property itself are suitable for renting, since you will not have much of an investment on your hands if you are unable to rent the property. Rather than rely solely on an estate agent’s advice, bearing in mind that estate agents’ opinions may be biased since their goal is to profit from a sale, you may want to consider consulting with a few letting agents who can help you secure rental valuations.
Familiarise yourself with the legal requirements – There are more than fifty Acts of Parliament and over seventy sets of regulations relating to the private letting sector, and it is essential you have at least a basic understanding of them to ensure your let property meets the legal requirements. The regulations, to name just a few, comprise of a number of Landlord and Tenant Acts, including a 1985 Act compelling landlords to provide housing that is safe and fit for habitation, gas, fire and electricity regulations and licensing of Multiple Occupation houses.
Inform and obtain consent from your mortgage lender – Unless you have a buy-to-let mortgage, you will be breaking the terms of any other type of mortgage if you do not inform the lender that the property is being let. Most lenders will approve your plan to let, provided you can show them a valid tenancy agreement and they are satisfied with the tenant’s references. In the case of leasehold properties, ensure you have obtained the head lessee or freeholder’s permission to let the property.
Inform your insurance provider – Standard household insurance is invalid for let properties, so it is crucial that your insurance provider is aware you require let property insurance, also known as landlords insurance. At the very least, your landlords insurance policy must include building coverage, to protect the property against structural damage in the event of an insurable event.
Fire, Gas and Electricity safety – In keeping with legal regulations, you must ensure your let property is fire, gas and electricity safe. Any furniture and furnishings inside the let property must comply with guidelines set forth in the most recent fire and safety regulations, and additionally a property built after 1992 or any property registered as a Multiple Occupation house must have smoke detectors on every floor. Even for properties built before 1992, it is still a good idea to install smoke detectors, as well as provide a fire extinguisher to store in the kitchen.
Landlords are legally required to ensure all gas appliances inside a let property are inspected annually for safety. A Gas Safe registered engineer must conduct the inspection, and tenants must be given a copy of the safety check certificate. If you need help finding a Gas Safe registered engineer, you can check the Gas Safe Register website. Additionally, it is worth installing Carbon Monoxide alarms for your tenant’s safety and well-being.
Electrical equipment regulations require all electrical appliances provided in a let property, including cookers, washing machines, dishwashers, refrigerators and smaller items if applicable such as kettles and toasters, to be safe for use. Currently no legal requirement exists stating that landlords must prove appliances are regularly checked, but failure to comply with the regulations could be considered criminally neglect and you could be held liable. If you are unclear about your responsibilities, the Electrical Safety Council has a guide on their website that offers landlords advice about what actions are necessary to comply with legal regulations. Should your tenant inform you of any electrical problems, including broken appliances, faulty wiring or damaged sockets, be sure to rectify the problem immediately, and if possible it would be in your best interests to arrange for an electrician to conduct periodic checks to ensure everything electrical is in good working condition.
Since landlords are responsible for gas and electricity, and thus could be held liable and sued if a tenant is injured as the result of a gas or electricity problem, a useful safeguard you should consider is liability insurance as part of your landlords insurance policy. Liability insurance will help protect you against the risk of a tenant making a claim against you, by covering any resulting legal expenses and damages amounts awarded.
Finding and checking tenants – Decide in advance the type of tenant you would prefer, and advertise accordingly. For instance, posting an ad in a corner shop may be a cheap method of advertising, but consider first if such a placement will attract the type of tenant you want. If you advertise on websites or in publications, research the website or publication first to determine if it even caters to the type who is your ideal tenant. Additionally, be cautious about setting rent too high, since that may deter potential tenants and lead your property to remain empty for longer than you can afford.
Once you have found a potential tenant, ensure you conduct a thorough background check before either of you sign paperwork to finalise the rental agreement. Since tenants are likely to be complete strangers, the more information you can gather, the better, so run a credit check, ask for personal and professional references and references from any previous landlords a potential tenant may have had.
Unfortunately, no matter how thorough you are though, it is not a guarantee that your tenant will always prove to be reliable. Even tenants with the best of intentions can face circumstances beyond their control, such as job loss or illness, so to protect yourself from losing the monthly income you depend on from rental payments, it is worthwhile having your landlords insurance include rent guarantee coverage. If your tenant is in arrears, rent guarantee means you will still receive payments every month for a pre-determined period, while you work to resolve the problem by either reaching a solution with the tenant or initiating eviction proceedings.
Tenancy agreements – Avoid letting your property on a casual basis. Always ensure a formal, written and witnessed agreement exists, and ensure that all tenants are listed in and have signed the agreement. If renting to younger tenants or otherwise financially questionable tenants, be sure to obtain a surety agreement from their parents or a homeowner close to them, guaranteeing that person will stand surety in case of rent default or damage to the property. Make sure you retain the original copies of any rental documents, containing the original signatures, rather than photocopied or faxed versions.
Along with the tenancy agreement paperwork, you and the tenant should also agree to and sign an inventory document, detailing the condition of the property and contents before the tenant moves in. To help avoid potential future disputes, take extensive photographs that can be used if necessary to show damage caused after the tenant moved in. Additionally, when a new tenancy begins, get a deposit up front, which can be returned when the tenant moves out if it does not need to go towards paying for damage or disrepair to the property.
Protecting your property – Tenants are unlikely to treat a rented property with the same care and respect they would if they actually owned it, and as such it falls upon landlords to ensure their property is well maintained and in good condition. If possible, arrange to view your property approximately every six months, so you can check if any problems need fixing and ensure everything is in good condition. Be sure though to give the tenant at least two days notice before entering the property.
As added protection for items within the property that belong to you, such as appliances and furnishings, talk to your insurance provider about obtaining contents coverage as part of your landlords insurance policy. This will help save you the cost of having to pay directly out of pocket to replace stolen or damaged items.
Managing your time – Your let property may be an asset, but that does not mean you want it taking up all of your time. Your tenants could turn to you anytime day or night if there is a problem, and if your presence is going to be required it helps if you live nearby. Since maintenance and repairs are the landlord’s responsibility, you will have to make the call if any work is required, and it will save time if you have a list of numbers on hand, rather than have to scramble for one, if an emergency plumber, electrician or other tradesperson is required.
Finally, be aware there are resources at a landlord’s disposal, which you can take advantage of if you need help or advice. You can join a landlords group, such as the National Landlords Association or the Residential Landlords Association, if you feel being a member will be beneficial, or you can consult those associations’ websites or landlord forums if you need to find answers to particular issues. Furthermore, if you live far away from the property or you simply do not have the time to devote to managing your property, you can hire a letting or managing agent to take care of the tenancy for you. For your own protection though, even if you hire an agent you should still be aware of your obligations as a landlord, since ultimately the responsibility for the property and tenancy falls on you, and it is your asset on the line.
Ladaniel McNaughton is a professional landlord and home improvement expert who has written prolifically on the subjects. His musing can be seen at Landlords Insurance, and vacant property insurance
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