Top tips on becoming a landlord
Renting out a property comes with many pros and cons. Before you can decide on whether to manage a property yourself or have a lettings agency take care of it, it’s important to have a solid understanding of what is required of you as a new landlord.
Calculate how much income your property will generate
Researching how much rent you can achieve is a good place to start. If the figures stack-up then you are on the right path. The main thing is that you can cover your mortgage payments and leave enough for maintenance, insurance and tax, while still making a profit. It’s worth researching rental properties at OnTheMarket.com to gain an understanding of what similar homes achieve in your area. I would also recommend talking to a local lettings agent who will carry out a valuation for you.
Inform your mortgage provider
Your mortgage lender will need to know your intentions, so informing them that there will be someone other than yourself living in the property is a must. Failing to do this may mean you are breaking the terms of your mortgage agreement, leaving you open to the risk of harsh penalties. Some mortgage lenders have been known to utilize rather inventive ways of finding out if your property has been put on the rental market. Checking the electoral roll, social media and online lettings portals are just a few of them.
Legislation and regulations
It’s ultimately your responsibility to provide a safe home for your tenants. Knowing the regulations and legislation of letting a property will help you succeed in doing just that. This will include fire, gas and electrical regulations, Energy Performance Certificates (EPCs) as well as Tenancy Deposit Protection. Keeping up-to-date with the more recent legislation acts including Right to Rent. Under new rules, landlords must check whether a prospective tenant can legally rent a property in the UK. Understanding the legalities around evicting tenants (Section 21 and section 8 notices) is also crucial. A reputable lettings agent can organise all of this for you and guide you through what is fast becoming a legislation minefield for landlords.
TDS has launched a Code of Recommended Practice. This Code of Practice sets out the recommended requirements which letting agents and landlords should meet as members of the Tenancy Deposit Scheme.
Speak to a lettings agent
Letting agents can be a great resource for new landlords. Not only should they be up-to-date with current lettings regulations and legislation but they can also offer advice on achievable rents in the current rental market, as well as how to present your property to give it the best chance of letting quickly to good tenants. If any refurbishment is required they may also be able to project manage such work on your behalf, or put you in contact with recommended contractors who already have a proven track record with the agent. It’s in the agent’s best interest to have your property rented out to good tenants and they’ll want to inform you of the best way of achieving this.
Purchase landlord’s insurance
Normal home insurance is not designed for rental properties so your current policy will differ from that of a landlord’s insurance. Purchasing landlord’s insurance may be more expensive than normal household insurance but it will ensure you are fully protected as a landlord. It may also be worthwhile looking into an insurance policy that covers loss of rent, although most reputable letting agents will offer a guaranteed rent scheme they are familiar with.
Obtain tax advice
When you begin renting out your property, you should inform HMRC as tax may be payable on your rental income. Failing to do this could result in a tax penalty and if left too late, the tax bill for your rental property could be a nasty surprise. Informing HMRC from the off will give you more time to prepare saving up for any tax bill, record outgoings, and work out how you are going to submit your tax return.