What are the top things you must consider as a buy-to-let landlord when sorting out rent?
- Assess the local rate-Before deciding on a rent to charge your tenants, you must assess the rates in the local area. You do not want to charge a rent that is too high in comparison as the chances are would-be renters will be deterred. At the same time, you want to attract a certain calibre of tenant, so do your research and deduce a fair monthly rental price for potential suiters.
- Consider clauses-Should you be considering letting out your home for a fixed term of more than one year, you should consider inserting clauses into your tenancy agreement. These will allow you to assess whether or not to alter rental fees over a set period.
- Set up easy payment methods-By trying to make your tenants pay by standing order, this will make matters much easier come the rent due date. This way, you should get payment on the specified date and negate the risk of having to claim on your rent guarantee insurance.
- Keep accurate records-Make sure you keep up to date and accurate records of all rent that has been paid to you by your tenant(s). Record the date, amount paid and details of tenants, should you have more than one property.
- Liaise with tenants-If you are considering increasing rent, inform your tenant as soon as possible. Explain your reasons and should they agree, get them to sign a new tenancy agreement or a renewal form. This should be dated and both parties should keep copies of the new arrangement. Note that if notice to increase rent is not done through the correct channels than it will not be valid.
- Check the law-The law states that if your tenant is a protected or statutory tenant, then under the Rent Act 1977, they will have or be entitled to apply for a ‘fair rent.’ These circumstances dictate that you will only be able to charge a rent as noted by the Rent Officer. This rent can be reviewed every two years, unless significant improvements are made to the property or there is a change in circumstances of the letting. Additionally, make sure your agreement is legally binding.
- Try to prevent arrears-Should you receive a late rental payment, you should inform the tenant in writing and warn them of further action. Consider serving a possession notice and starting eviction proceedings should the tenant not provide a suitable reason for the late payment.
- Take out rent guarantee insurance- Even the most perfect looking payments, with glowing references, can fall into arrears. Changes in circumstances can be unforeseen, so by taking out rent guarantee insurance, you can have piece of mind that you wont be out of pocket. This will also cover you should you take eviction proceedings out against a tenant, during which period you will not be paid any rent from them.