Twelve things you need to know as a first-time landlord
Taking the first steps into the world of rented property can be a daunting task for the novice landlord. There seems to be so much bureaucracy and regulations to comply with and that is before you have even found a tenant. Our no-nonsense guide to renting out a property should ease you over the first hurdle and take away some of the stresses of starting out as a landlord.
- How will I find my tenants?
You can either find tenants yourself by advertising in the local paper or by word of mouth. Alternatively, you can pay a fee to an estate or letting agent to find the tenants, carry out reference and financial checks, and deal with the deposit and other tenancy-related issues. The first option is obviously cheaper but you may prefer to rely on the experience of a letting agency if you are a first-time landlord.
- What type of tenancy?
Nearly all new tenancies in the private rented sector will be what are called Assured Shorthold Tenancy agreements which are often for an initial fixed term of six or twelve months. Once the first six or twelve months have expired, the tenant can remain in occupation in the property on a month by month basis, under the same tenancy agreement, but it is now called a periodic agreement.
- Do I need a solicitor to draw up my tenancy agreement?
This depends on the complexity of the agreement and whether or not you use a letting agency. There are several websites which allow you to download a pro-forma agreement, or you can ask a solicitor to draw one up to cover your specific requirements. Check if the solicitor will be charging a fixed-fee for the agreement or charging on an hourly basis. If you are using a letting agent to find tenants and manage the property for you, they will have their own standard agreement.
- Do I want to manage the property myself or ask an estate agent/letting agency to do it?
You need to carefully consider whether you have the time to manage the property yourself and deal with issues such as the boiler breaking down or a tenant losing his key. If you live nearby, or are retired, you may prefer to deal with these day-to-day issues yourself as it will certainly be cheaper. However remember that dealing with maintenance issues can be time-consuming. The alternative is to pay an estate agent or letting company to manage the property for you. Check the level of their fees and what is included in their management agreement.
- Think through what you will allow your tenant to do (or not do) in the property
Some tenants may want to bring a pet with them to the property or run a small business from home. If you are worried about a pet causing damage to the property, then you need to put a clause into the agreement prohibiting animals or stating one named animal will be allowed. If you do not want the tenant smoking inside the property, your tenancy agreement must clearly say so.
- Tenancy deposit legislation
If you take a deposit from a tenant, you must ensure that it complies with the tenancy deposit legislation. Otherwise, you could end up being ordered by a court to pay the tenant compensation and have difficulty evicting them at the end of the tenancy. As a landlord, you must ensure that you put the tenant’s deposit into a government backed tenancy deposit scheme within 30 days of receiving the deposit. You must also ensure you provide the tenant with specified information about the scheme (called prescribed information).
- Inventory check-in
The condition which a property is left in at the end of the tenancy can be one of the main areas of contention between landlords and tenants. Compile a detailed inventory list and report on the state of the property before the tenancy starts, which is agreed and signed by both landlord and tenant. This can save some of the headache further down the line. Also take photographs showing the condition of the property before your tenant moves in. Most letting agents offer an inventory check-in service.
- Gas Safety/Other regulations
Remember that you are responsible for ensuring a gas safety check is carried out on all appliances and installations in the property, by a Corgi-registered gas engineer, once a year. A copy of the gas safety certificate needs to be given to the tenant. Your property will also need to comply with all other relevant standards, for example for furniture and fittings, and regulations/licensing if it is let as a house in multiple-occupation (HMO).
- Repairs Obligations
Also remember that you will be responsible for keeping the property in a good state of repair. There will be obligations about this contained in your tenancy agreement and also implied by law. If you fail to keep the property in a good state, your tenant can take you to court and the court can order you to carry out these repairs and also pay your tenant compensation.
- Rent issues
Most rent is paid monthly in advance by standing order on a specific date and many landlords will in addition ask for a couple of months rent to be paid before the tenancy starts. You may also want to consider having a guarantor for the tenant, especially if they are a student or cannot provide good financial references. This is a person (often a parent if the tenant is young) who will agree to pay the rent in the event that the tenant defaults.
- Check -out
The check-out procedure at the end of the tenancy is a very important part of the process. Make sure you have clearly agreed a time and date for your tenant to move out. You will then need to carry out a comprehensive inventory check-out report. If you intend to make deductions from the tenant’s deposit, you must follow the procedure as set down in your particular tenancy deposit scheme and the relevant legislation.
- What happens if things go wrong?
Unfortunately, even with the best planning in the world, things still go wrong. Your tenant may stop paying the rent or a neighbour may complain they are holding noisy parties. Make sure all communications between you and your tenant are in writing, be it by email or letter, and keep copies. You may be able to ask your tenant to leave the property in certain circumstances, e.g. if he has broken the terms of the agreement or you have given him the correct notice. You will only be entitled to bring court proceedings to evict your tenant if you have served the proper possession notice first.
Do remember that landlord and tenant law can be complicated and each case is different. If you have specific queries about a landlord and tenant matter you may need to consult a specialist solicitor.
For more tips on managing your property, you can check out our guides here.