Whether you have accidentally become a landlord due to an inheritance, or you have decided to join the industry and make your first investment, it can be difficult to understand where to start. Here are our tips on what you will need to know:
Three things to consider before becoming a landlord
Before making this commitment you should ask yourself these questions:
- Why do I want to become a landlord?
- Do I have the energy and time to let a property?
- Would I be happy dealing with tenants on a regular basis?
If you come to the conclusion that this is the right industry for you, then you should consider what type of landlord you want to be (besides a good one!)
Who do you want to provide quality housing for? To name a few, you’ve got the option of students, families or professionals. The best way to decide is to look at the current demand in the area. You will also need to be aware of whether your let requires a licence. For example, if you are letting to three or more people from different households, you will need a HMO (House in Multiple Occupation) licence. If you are unsure of whether this applies to you, contact your local authority for advice.
You should also decide how involved you wish to be. Do you want to manage the property and tenancy yourself, or would it be best to enlist the skills of a letting agent? Depending on your other commitments, an agent can help keep things running smoothly.
If you decide that becoming a landlord is not for you, then you may prefer to go down the route of renovation in order to sell the property on for a profit. You could make this a one-time venture, or use the money from the first sale to continue climbing the property ladder, building on the yield from each investment.
Laws and regulations
It can be overwhelming at first, but you need to know your legal responsibilities. The following are examples of important ones you should know:
- Fire, carbon monoxide and gas safety
It is a legal requirement for you to install alarms in your property. There should be a minimum of one smoke alarm on each floor of the property. Carbon monoxide alarms are also a requirement in any rooms with a solid fuel-burning appliance.
Gas appliances must be maintained to be in a safe condition – a safety check must be carried out every 12 months. You must also provide your tenants with a record of the check within 28 days of it being completed or to new tenants before they move in.
As well as putting the lives of your tenants in danger, you face receiving a hefty fine for breaking these laws.
- Tenant Fees Act
As of 1st June 2019, it is now illegal to charge tenants additional fees. Landlords and letting agents can only take permitted payments. This includes a holding deposit of up to one week’s rent and a security deposit of up to five weeks’ rent in order to secure the tenancy. Throughout the tenancy, default fees can be charged for situations such as lost keys, but written evidence must be kept.
In order to remove a tenant from your property, you need to go through the official process. This is to ensure that the eviction is lawful and justified. You can either serve them a Section 21 notice or a Section 8, depending on the circumstance. A Section 21 is the more commonly used method. If your tenant does not leave after the two-month notice period that is given, you will have to apply to the court for a possession order. However, the Government has recently announced plans to consider scrapping this option.
Section 8 notices can be served for two reasons. Under mandatory grounds, your tenant must be in at least two months of rent arrears for monthly payments or eight weeks if they pay weekly. Under discretionary grounds, it is up to the court to decide, but this usually includes regularly missed payments, breaking the terms of the agreement or damage to the property.
Rights and Responsibilities
As a landlord, you will have to make sure that certain documents are handed to the tenants at the beginning of the tenancy. This includes a copy of:
- The Government’s How to Rent guide.
- The property’s EPC (Energy Performance Certificate).
- An up-to-date Gas Safety Certificate.
- A tenancy agreement, setting out the legal terms and conditions for both yourself and the tenants to follow. From when you expect them to pay the rent, to the date the tenancy will end, this contract is a binding document to be signed by both parties.
You also need to check the following:
- Your smoke and carbon monoxide alarms are in working order.
- All appliances are also in working order.
- You have placed the tenant’s deposit in a Government approved Deposit Protection Scheme.
You need to also check that they have the ‘Right to Rent’, which is a scheme brought in by previous Prime Minister Theresa May, in order to make sure that landlords check the immigration status of all prospective adult tenants. However, there has been a recent call to current PM candidates to scrap the scheme if they take charge.
You will also benefit from the following:
- Performing periodic inspections, to make sure that the property is being looked after and check for any maintenance requirements. As the owner of the property, you have the right to enter and take a look around, but you must provide the occupants with at least 24 hours’ written notice.
- Taking photos of the property before the new tenants move in. This is a good idea for both parties to do, in order to use as evidence in case of a dispute over any damage caused during the tenancy.
- Creating a detailed inventory of all furniture, fixtures and fitting, as well as their condition. This will also help in the event of loss or damage.
Preparing the property
You need to decide whether to let the property furnished, semi-furnished or unfurnished. Depending on the type of tenant you wish to attract, one option will be more beneficial than the others.
For example, students tend to look for fully furnished homes, to reduce the amount of packing and moving of furniture they will be doing throughout their time at university. However, a family looking for a permanent home will most likely have their own furniture and want to organise and use the space as they see fit.
Protect your let
By making sure that your property has the cover it needs, you can rest assured that your investment has the protection it needs. Just Landlords provides specialist cover, to give you peace of mind.