The 1988 housing act and the amendments in the 1996 housing act had a positive effect on revitalising the private rental sector. These acts also have given the landlords a far greater security when letting their properties. Mortgage lenders have also in the recent years made it more accessible to get Buy to let mortgages. All these factors have influenced an increasing number of people to become landlords as this can also prove a steady income during the retirement period. Having said that, it may seem as ideal investment do not rush into the being a landlord without giving it a serious though! Below are some important tips to help you if you do decide to become a landlord.
|
Know your reasons
|
As a landlord, you should recognise your primary reason for renting your property as it will play an important part in making decisions.
- If you are going to move away for a work for a year or longer then makes sense to use a letting & managing agency to take care of your property or if the property is for investment purposes only and you want to make a career out of it then maybe you would like to do it alone.
- If its property for investment then you will have to clearly study your target market before you purchase as you have to take into account the prospective tenant's preferences. For e.g. in a city you may want to buy a one bedroom or two bedroom apartments as single renters or young professional couples will be attracted to these similarly in country a larger place for families maybe a better investment.
- However, if it's your primary residence then what matters to you most will be important as getting premium rent will not be a primary concern.
|
|
Prior to advertising your property to let
|
Before you start looking for tenants ensure you have looked into the following
- If you do not have buy-to-let mortgage ensure you take approval from your mortgage lender to take in tenants/lodgers in the property.
- If you are in a leasehold property, get permission from the head lessee to rent the property
- Have a buildings insurance and ensure it is update and is valid even if the property is on rent
- If it's a furnished property get a contents insurance
- Every landlord's policy should include property owner's liability which will cover anything that happens to your tenant while he is on your property. This is not required by law but it is always better
- If you are an overseas landlord then look into exemption rules as applied by Inland revenue
- Ensure Gas and safety regulations are met , and gas appliances are checked every 12months
- You can take out rent and legal indemnity insurance, which covers the cost of legal expenses if you need to evict or take legal proceedings against a tenant and the loss of rent.
|
|
Setting the rent
|
You set the rent at a realistic level and do proper research before deciding on the rent. It is usually good to have a local letting agent to have a look around and let you know the true rental potential of your property. You may then use or choose not to use the letting agent. Main factors which will decide the rent will be
- Market demand for the tenants
- Location of the property based on main target market e.g. near the university for students, close to station for professionals commuting to work etc…
- Current rental value of the properties in the local area and near-by similar areas
- Condition of the property
- The quality, range and condition of the facilities that the property has. However, at times do remember it may be better to lower your rent a bit instead of leaving the property vacant as it will give higher return if its let for longer number of weeks.
|
|
Furnished or Unfurnished
|
You can choose to let your property either furnished or unfurnished there is demand for both kinds of property. The decision to furnish your property will primarily depend who you're prospective tenants are. Families prefer unfurnished properties to accommodate their possessions they have collected over the years; similarly professionals may prefer furnished property. However, do ensure furnishings must be appropriate for your target tenants, whether they be students, single professionals or corporate market. If you are targeting top-end market then put in top of the range furnishes however if its student then do realize basic furnishes will suffice as quality of furnishing will not add any rent value. Best option would be to do your market research and based on your target market let your property furnished, unfurnished or part furnished.
|
|
Preparing the property
|
First impressions make lasting impact so it's important that your property is presentable. Do the following before a viewing
- ensure all appliances are in working order
- fix any leakages and treat any damp or rot issues
- Make sure the front of the house is clean and inviting
- If you have a garden make it look presentable and well kept.
- Ensure bathrooms and kitchens are clean and uncluttered.
- Get your windows, carpets cleaned, if they are too dirty it maybe worthwhile to get them professionally clean.
- Ensure the entrance to your property is cleaned and well-presented.
|
|
Managing your property
|
You can choose to use a letting agent or do it yourself. Even if you use a letting agent to find a tenant; you can choose to either allow him to manage the property as well. They generally charge you around 13-15% of rental value if they fully manage your property. Finally how involved and how much time you can dedicate to being a landlord will be an important factor in your decision.
|
|
Advertising your property
|
There are lot of ways by which you can attract prospective tenants, if you are letting your property through a letting agent then check how they will advertise the property. Check if they have local coverage via newspapers, sign boards, and do they use internet for advertising as this can cover and attract higher number of tenants. However if you do decide to rent your property privately then you too can avail of lot of mediums
- Offline: - Newspapers, local property publications are all quite trusted and used mediums. Word of mouth is also a good way to get a prospective tenant. Local stores and community places also allow advertisement of accommodation.
- Online: - This is one of the fastest growing medium; almost 75% people now search for homes online. Coverage is better and is more cost effective that offline adverts.
|
|
Finding Tenants
|
Letting your property can take anytime from 2 to 6weeks. By advertising you start the first step towards finding your tenant; letting agents have higher resources at their disposal in terms of advertising than you would if you were letting privately. Second will be showing your property to prospective tenants, prepare your property well before holding viewings as first impressions are very important. During a viewing, let the tenants view the property at their pace. Answer any questions they may have, and do highlight the good features of your house. Give the viewers time to discuss the property alone before they leave. Do not pressure them for a decision whilst they are viewing the property. You will probably be able to guess their decision anyway.
|
|
Checking References
|
Once you have accepted offer from a tenant, do not hurry to handover the keys. It is wise and important that you carefully checkout your tenant to ensure that your tenant does not turn out to become a liability in future. Using a professional referencing company will help you achieve this, by giving you information about a prospective tenant's employment and past tenancies, indicating their likelihood to be able to pay their rent and their reliability at doing so. If you do not want to hire external services then do check yourself, tenants past landlord' details, employers references and bank references. Verify that information supplied by the tenant is accurate. If you are unsure of a tenant, it may be worth while to get someone to act as guarantor for the tenant.
|
|
Before the tenants move in
|
Before the tenants move in ensure the property is in good clean condition. They way you hand in the property is how you should expect to get the property back. Also ensure
- There are instructions for all the appliances
- Gas appliances safety and check procedure certificate is handed over
- All important connection points for gas, cooker, heating water etc are labelled
- There is a telephone line
- Any emergency numbers. Procedure should be handed over to the tenant.
|