Despite the slight upturn in the housing market, it’s still not guaranteed your property will sell, which may result in you becoming a reluctant landlord. So what do you need to know to make sure you’re up to speed with the letting market?
Don’t rely on just one agency to tell you what you can charge; a good rule of thumb is to ask three, then take the middle figure, unless you know there’s a shortage of similar rental properties, then try for the top end. Decide what utilities, if any, are to be included. It’s probably safest to have the tenant pay everything. You will need to work out what tax you’ll owe on the income, bearing in mind you can offset certain costs against this.
Ensure electrical wiring, gas appliances and plumbing are checked by professionals. You’re required to have annual checks on gas installations from a Gas Safety registered engineer. Treat any damp and fit smoke alarms. Any hazards (eg loose stair carpet) should be dealt with.
Tenancy Agreement & Letting Agents
Even if you’re renting to friends, it’s essential they sign a standard tenancy agreement, to avoid unnecessary embarrassment if they stop paying the rent or trash the place, which happens all too often. If you work full-time, it makes sense to use a letting agent, despite the outlay, as they can deal with the whole process for you, such as interviewing tenants and performing all the necessary background checks, etc, which can be very time consuming.
Don’t assume that your existing contents and building insurance from when you lived in the property will be okay once you have tenants. In many cases it will become invalid the moment the property is let, as the risks are different, plus it’s a business concern, so you will need a form of commercial insurance. Look for a ‘buy to let’ policy, such as those provided by UkinsuranceNET. Insurance companies have ways to check whether a property is being rented, so don’t risk being uninsured.
You are legally required to keep installations for water, electricity, gas and sanitation in good repair. If possible, don’t hand over maintenance responsibility to the letting agents, as they won’t take the time to get quotes and you may end up paying way more than you need to. It is worth dealing with issues promptly, as tenants are paying rent, plus it will go a long way to promoting good relations.
Becoming a landlord may have been a ‘needs must’ decision but if you do your research and take sound advice, it could end up being a positive move for your business career.