The Landlord’s Guide to Letting
So you have taken the plunge and decided to become a landlord, fantastic! We outline some key points you need to consider when letting out your property, from finding a tenant to managing the property during the tenancy.
Finding a tenant
The most important thing when placing a tenant is to obtain proper references, lessening the risk of rent arrears, damage to your property and ensuring that they are of good character.
An inventory is also vital to take account of the condition the property when let, as well as provide a list of the possessions left in the property. Organise for a professional inventory during check in and check out to avoid disputes over the damage deposit.
Using a good letting agent will take the pressure off as they will arrange and carry out viewings, take references, collect and secure the damage deposit, arrange an inventory and draw up the tenancy agreement.
In addition, agents will often already have applicants on their books and can list your property on portals such as RightMove, Zoopla and Findaproperty, gaining you maximum exposure.
The tenancy agreement
Ensure you use the correct agreement for the type of let – the most common agreement is the AST (Assured Shorthold Tenancy), but you would not be able to use this for a holiday let or renting a room to a lodger.
When letting to more than one individual it is always a good idea for all tenants to be listed on either joint or separate agreements, especially if they are unrelated.
Include in the tenancy agreement who is responsible for council tax, utilities and insurance of possessions – tenants often assume that this is included in the rent, or that their contents are insured under the landlords policy, so making this clear will avoid any potential issues.
If you are unsure about what type of agreement you need, seek advice from the Citizen’s Advice Bureau or a local letting agent, who shouldn’t oblige you to sign up with them!
Landlords usually require the tenant to pay a refundable deposit, known as a damage deposit, to guarantee against damage to the property and is usually the equivalent of four to six weeks rent.
It is a legal requirement to protect deposits in an approved deposit scheme and provide the tenant with details within 30 days. There are three schemes available: the custodial scheme DPS and insurance-based schemes TDS and mydeposits.
If you use an agent, ensure they secure the deposit within the prescribed time limits otherwise you could be liable to penalties. You should also check that they have a separate client account if the deposit is held by them.
Choosing agents belonging to trade bodies such as TPO (Lettings), ARLA and NALS, or members of SAFE Agent, guarantee they will have the deposit held in a secure manner – find out more about these bodies here.
As a landlord, you are legally obliged to provide tenants with valid gas safety and energy performance certificates for the property.
Gas safety checks must be performed annually by a registered engineer, so make sure you schedule a renewal visit to avoid falling foul of the law.
Similarly, an EPC is required when marketing the property to give potential tenants information about its energy efficiency. EPCs are valid for ten years, although you will want to have a new check performed if you implement energy saving measures during that time.
You will also be responsible for electrical safety of appliances left in the property and sockets, as well as fire safety of any furnishings provided by you. While there is no legal requirement, an electric safety check is advisable and you should make sure any furniture you provide is meets fire safety standards.
Note that if you let your property to three or more tenants who are unrelated you will require an HMO licence from your local authority and must adhere to their regulations surrounding health and safety.
Managing your property
While many landlords use letting agents to find a tenant, the decision on whether to use an agent to manage your home will boil down to a few factors.
The biggest factor is time: consider carefully all your life commitments and whether you will be able to deal with any maintenance and repair issues that may arise.
Location is another key factor as it is important that you are readily available to tend to issues – if you are located overseas or a long distance away from the property, this can be difficult to manage.
If you do decide to go down the agent route, don’t be afraid to negotiate on fees and always read the small print!
Always keep receipts
It might seem trivial, but many landlords forget to do so! As rental income is taxable, you will want to keep a record of any expenses related to the management of your property to offset against your tax liability.