In the UK, private renting is becoming the norm. The rental sector has more than doubled since 2001, rising from 2.3 million to a massive 5.4 million privately rented households in the UK. This trend is predicted to continue, with an additional 1.8 million households becoming private renters by 2025 as a result more than half of 20-39 year olds are expected to be renting privately by 2025.
This brief guide is designed for anyone who’s taking their first steps towards becoming a landlord.
A few things that you should consider before jumping into making that life changing decision include: The property that you own? Is it fit for purpose? Does it adhere to all the legislation and codes of practice? Have you inherited a property that needs some TLC?
You may want to look into upgrading the property so it is fit for adequate living and complies with the legislation of renting your property out.
- Management myself or agent?
- Finding the right tenants?
- Landlords rights & Responsibilities?
This guide will give you some brief info of all the above along with much more to help you on your way.
Furnished / Unfurnished
A furnished property may attract a higher rental value per month, but bear in mind that whatever furniture or appliances you leave in the property could be your responsibility to fix or replace when broken unless stated otherwise in your tenancy agreement. We would highly recommend that an inventory is completed with any fixtures and furnishings of the property before a tenancy has started that way everything is documented and both parties are covered under the inventory.
This could be a unique selling point for letting out your property and potential tenants to want to live in your property, but there are also factors to consider with this as they could also damage your property. If you decide to allow pets we would recommend within your tenancy agreement that you include a section stating any damages caused by pets are charged to the tenants.
You may think letting your property out and receiving a rental income is pretty straightforward and that everything will run smoothly. Unfortunately this isn’t the case, there are factors to consider when letting out your property – from finding suitable tenants to credit checks, references, management of the property, rent collection, maintenance and repairs and emergencies. All of this you may want to consider: do you have the time and the resources to be able to fulfil all the needs of renting a property out? do you have a maintenance team to be able to carry out essential repairs and maintenance?
Do you have the time to be chasing for rents, running checks and getting references on potential new tenants? Do you have the time to be able to keep up with the legislation on how a rental property should be kept? Working with a management agent would be able to take all of this off yours hands for a small fee and do everything for you, leaving you with the peace of mind that everything is all running smoothly and in good hands at the end of the day this is your investment.
Landlords Rights & Responsibilities
As the landlord, you’ll be responsible for sorting out insurance to protect your property against accidental damage such as fire and flooding. Your tenant will need to arrange their own contents insurance if they want to protect their possessions. If you choose to supply furniture and appliances, you’ll need to keep them in good condition. This might mean replacing them or sending out a handyman to fix them. You’ll also need to carry out the majority of repairs. This is probably a good thing as it avoids DIY-mad tenants potentially damaging your property. If you’re using a letting agent, they’ll handle this, but if you’re going to be a hands-on landlord you’ll need to make sure you’re easily and reliably accessible to your tenants.
Another big responsibility is making sure the property is up to code before the tenancy starts. This means things like fitting smoke alarms on every floor, as well as making sure there’s a carbon monoxide alarm in any room that uses solid fuel (such as wood and coal). From 2018 this will also mean making sure your property meets minimum energy performance standards. If you rent your property to a disabled person, you may be required to adapt it to your tenant’s special needs under the “duty to make reasonable adjustments” section of the 2010 Equality Act.
Another responsibility is to look after the deposit your tenant paid by keeping it in a Tenancy Deposit Protection Scheme. If you choose to use a letting agent they’ll likely deal with this on your behalf but if you are going it alone there are several schemes out there that can help you with this, you’ll also be in charge of ensuring that all of your paperwork is up to date including energy performance certificates, gas certificates and a valid tenancy agreement. Although you may well own the property, with you now renting your property out to someone else you no longer have the right to walk straight into your home – you will now have to give the tenants 24 hours should you require access to the property.
This should be clearly labelled in your tenancy agreement, Upon giving notice to gain entry to the property which must be done via email or text message to ensure all evidence is documented should you ever require proof. You also have the right that your rent is paid and in some exceptional circumstances and conditions you have the right to end the tenancy agreement before the agreed tenancy end date, in order for this to be done you must go through the correct channels. If the tenants break the contract before the tenancy is up you also have the right to ask for the remainder of the rent left on the tenancy. Should the tenant fail to pay for the remainder you have the right to bring in legal action (Please be advised that this should be also documented within your tenancy agreement).
Paperwork & certificates (Legal Requirements).
Please see below a list of all certificates needed.
Energy Performance Certificate.
All properties should that be a rental or a sale property requires an energy performance certificate (epc) this will tell you how energy efficient your property is with a grading system from A (being most energy efficient) to G (being the lowest score you can have and improvements need to be made). An EPC will also give you any recommendations that can be made to the property to improve the energy efficiency grading along with any potential savings that can be made by carrying out the recommendations. Current legislation states that any rental property scoring below an E rating is no longer allowed to be rented out and improvements have to be made to improve the rating before the property can be let out to tenants. All EPC’s are valid for a period of 10 years and are required to be updated once they have expired.
Gas Safety Certificate.
This is a legal requirement that has to be done and kept up to date by all landlords, your gas safety certificate is required to be tested every year by a fully qualified and trained gas engineer to ensure all appliances are fit for purpose and safe.
This is a legal documentation between yourself and the tenants outlining all the legal requirements as a landlord and the landlords rights and responsibilities along with tenants rights. It is recommended that a solicitor takes a look over your tenancy agreement for a small fee to make sure everything is covered on all basis and legal.
A HMO licence is required should you decided to rent a larger property out with multiple occupancy of 3 tennants or more that are unrelated this licence is valid for a period of 5 years.
Written permission from your mortgage lender.
Most mortgage lenders give you the loan on the basis that you’ll be living there, by renting without their knowledge you could get into trouble with them if you start renting the property out without their knowledge. In order to keep things above board, you’ll need to send your mortgage lender a “consent to rent” application. They may increase your mortgage repayments or charge you an admin fee, but in most cases your mortgage terms will stay the same. There are also special buy-to-let mortgages out there specifically for landlords. Over the long term you may need to consider moving to one of these mortgages, as your consent to rent may only be valid for a few years at a time.
Rent Costs & Prices.
The best way for you to decided how much rent you should be charging for your property is to search the market and your area and take a look at what other companies/landlords are charging for their property, this will give you a rough indication as to what you could charge. Some properties may charge more than what you are wanting to charge for your rent per month/week but this will give you a clear indication on an average rent per calendar month. It may also be a case that you may want to include utilities within to your rent this must also be clearly labelled within your tenancy agreement to what the cost entail.
We hope that this brief guide has given you some insight of starting up as a landlord and answered some questions you may have wanted answering.