The Inside Edge
1. Take safety very seriously.
Landlords have obligations under law to keep tenants safe in relation to gas (carbon monoxide), electricity and fire. By law you MUST have an annual, valid gas safety certificate at ALL TIMES. There is no legal requirement to have an electrical certificate, but the only real way to prove the electrics are safe is a certificate, so sensible landlords get one every 3-5 years. All furniture and furnishing must show a fire safety label, if it doesn’t, it’s illegal, and you need to remove it. It is also good practice to install smoke/heat detectors and a carbon monoxide alarm. We all deserve to be safe in our homes.
2. Reference your tenants & get a deposit & guarantor
Having non-paying tenants in your property means no income, and it may continue for several months. It is a landlord’s worst nightmare, but unlikely if you take the right steps. To significantly reduce the chances of problems, reference your tenants (e.g. RLA Tenant Referencing), get several applicants and choose the best – don’t just take the first one that comes along. Take a deposit (it needs registering by law in a deposit scheme (see the Government rules).
You should also get a guarantor (e.g. a parent or relative) to agree to pay the rent if the tenant doesn’t (most tenants are agreeable to this). If you take tenants on benefits, get the benefits paid into a credit union account if you can.
3. Look after the property
Before the tenants move in, take copious photographs, with dates on them – floor, walls, appliances, ceilings, doors, and windows. Print them off and get the tenant to sign each one, so they agree that is the current condition of the property. If they do damage the property, this is clear evidence which will help you retain some or all of their deposit. During the tenancy, visit to inspect the property every three months and inform the tenant of any improvements they need to make (you need to give the tenant advance written notice of visits).
4. Tell your lender & freeholder
If you don’t tell your mortgage lender you are renting the property out, you are likely to be in breach of your mortgage conditions, which may invalidate your insurance. The best policy is to inform your lender. Most are agreeable to homes being converted to buy to let properties. If the property is a leasehold property (i.e. a flat), you should also write to the freeholder and give them the tenant’s name and contact details in case of emergency (some, councils especially, may charge for updating their records).
5. Use a written tenancy agreement
Don’t even think about letting a property without a written tenancy agreement. You can buy one online (Assured Shorthold Tenancy Agreement Template) or in some stationers like WH Smith. A written agreement makes the details of the tenancy very clear in case of problems, and will be required in case of any court action. Letting property on verbal agreements is asking for trouble. Ideally the tenancy agreement will be signed AND witnessed. Remember to keep it safe, and scan a copy.
6. Get an Energy Performance Certificate
As of October 2008, an EPC has to be shown to a tenant BEFORE they move into a property, by law. An EPC is a grading of the property’s energy efficiency. They cost about £75, and last for ten years. Getting one is easy, and contains advice to improve the efficiency of a property. It’s advisable to replace all light bulbs with energy saving bulbs before the EPC assessor visits. Not showing the EPC to the tenant prior to them moving in may result in a fine from Trading Standards.
7. If tenants stop paying, act fast
When a tenant stops paying, many landlords freeze, and simply hope the tenant will pay up. Before you know it, several months have passed, and the arrears put your own financial situation at risk. To avoid this, watch rent payments like a hawk, as soon as one is late, call and write to the tenant to request payment. As soon as they miss a second monthly payment, you should issue formal eviction notices (which usually encourages tenants to pay, but if not lays the groundwork for the eviction). The eviction process is not straightforward and it’s advisable to get help from someone like Landlord Action as soon as a tenant misses that second monthly payment. Typically an eviction (including legal and court fees) costs £700 and takes 3-6months – the quicker you get on it, the smaller the problem. Always be understanding, but also be firm.
8. Check you are insured
Many home insurance policies are invalid if a property is rented out, so check with your insurer. You also need to inform your buildings insurance provider (or freeholder if they arrange it on your behalf). If your property burns down and you are not insured, it could destroy your financial foundations, so check it. You should also get public liability insurance, so if someone is hurt in or near the building, you are likely to be covered. Insurance is boring…. unless you need to make a claim.
Get an online Landlord Insurance Quote from Melville Burbage and get online prices with a High Street Service.
9. Pick a good agent (or get trained)
Letting agents are unregulated, and sadly some are unscrupulous and will impose what some consider unreasonable charges on tenant or landlord or both, often when it’s too late to refuse. It is invariably best to use an agent who is a member of the Association of Residential Letting Agents (ARLA) as they have high standards, and agents need to be formally trained. Ask them what their fees are, including tenancy set-up fees, management fees, renewal fees, and what they charge tenants – get it in writing. If you do not use an agent, don’t DIY without some training – landlord associations and ARLA do training, as do many local councils (as part of their accreditation schemes). Property law is extensive – don’t get burnt, get trained. 10. Join a landlord association The largest UK landlord association is the National Landlord Association, which provides a regular magazine, many member benefits, a telephone helpline, and an annual conference. Membership is low cost and well worth it. The second largest UK landlord organisation is the Residential Landlords Association which offers similar benefits. Joining one gives you an insight into what a professional landlord needs to know to protect his or her finances and reduce risk of problems.
About the Author
Ollie Cornes is an experienced, professional landlord and entrepreneur. In 2002 he founded (and later sold) the Singing Pig property forum. He owns a multi-million pound portfolio of properties in and around London, and is qualified with the Association of Residential Letting Agents. His business, Juicy Property, provides online property management software and related services to landlords.