As a buy-to-let landlord, you have a number of considerations to be aware of in today’s market. If you are unprepared, you could find yourself in a legislative and organisational nightmare!
Don’t panic though-we have ten top-tips for you to make letting your property a stress-free and profitable process!
Take out insurance-It is vital for you to ensure that your property is fully protected should any damage occur to the building or its contents. Taking out a comprehensive landlord insurance policy then is imperative to give you peace of mind. What’s more, it is highly recommended that you look at purchasing a rent guarantee insurance policy, to protect against non-paying tenants. Even tenants with the best references can experience a change in circumstances, so make sure you are protected.
Make your agreement perfect-The tenancy agreement is the contract between you and your tenants, outlining your respective rights. As such, you should make extremely sure that all details in the agreement are correct, such as the tenant’s name, the rental amount and address. These details MUST be correct in order to protect both parties.
Carry out compliance-In order to avoid fines or a potential prosecution, it is imperative that you comply with your legal obligations. These can range from fire, smoke alarm and gas safety, to Right-to-Rent or Energy Performance Certificates. There are undoubtedly lots of regulations to which you must adhere, so make sure you fully understand these terms before you let to a paying tenant.
Consultation is key-Once you have agreed a mortgage term on your buy-to-let property, it is important to remember to consult relevant people. These could include contractors, local councils and utility suppliers.
Protect your deposits-An important component of a successful letting is to protect your tenants’ deposits in one of the three Government approved redress schemes. Should you rent out your property on an Assured Shorthold Tenancy (AST), you must place deposits in either:
- The Tenancy Deposit Scheme (TDS)
- Deposit Protection Service (DPS)
You must give your tenants details on what scheme their deposit is protected in, within 30 days. This is known as the prescribed information.
Inspect your investment-As a buy-to-let landlord, you must carry out regular inspections on your investment. Always try and give your tenants at least 24 hours notice before turning up!
Manage the maths-You must make sure that you are able to sufficiently manage your investment and have a sound knowledge of your budget. Work out your typical monthly rental yields and balance this against outgoings, such as mortgage payments. It is also important to make sure you have an overflow fund for unexpected outgoings, such as to repair damages.
Research your surroundings-When purchasing an investment property, it is very important for you to research the area in which you a buying. Think about finding out the typical rent in the region, if there are good schools nearby and locate any good pubs or restaurants. Often, the demographic of the local area will lead to you attracting a specific type of tenants, so make sure you purchase in the correct area. Tenants will normally have plenty of questions, so make sure you know the answers!
Realise the importance of inventories- At the beginning of a tenancy agreement, creating a thorough inventory is absolutely vital. Take photographs of all rooms of the internal and external of the property, highlighting existing damages or issues and including notes. This was not only be important when carrying out mid-term inspections, but will be imperative should a deposit dispute occur at the conclusion of the tenancy. Give your tenant a copy and get them to sign and date.
Think about a letting agent- Managing a property can be extremely time-consuming and if you are not careful, mistakes could occur through overworking. The chances are you are going to be managing your letting business part-time and that you have another paid profession. If this is the case, you should consider a reputable letting agent to manage your investment. This will not only save you a lot of hassle but will mean you comply with your legal requirements.