20 things to consider for first time landlords
Buying your first buy to let property is exciting and can be a great investment. Here are the issues to consider before tossing the keys to your tenants:
1. Target market
Top, middle or bottom? A student let can be risky; professionals are a safer bet. Charge competitive but not excessive rent.
Understand the lettings laws. Consult your local authority’s planning, building and environmental health departments, your mortgage company, insurers, landlord or freeholder.
You’ll be under the beady eye of numerous authorities, so be a good landlord and follow the rules. Participate in Accredited Landlord Schemes, a benchmark of good practice.
Due diligence – will what you buy let? Is the area improving or declining? Where are the transport links, facilities and trouble-spots?
A permanent record of the terms of the contract; the most important document after the lease agreement.
A credit check will safeguard against problem debtors. Tenant referencing from your tenants’ employers and landlords is key to finding out whether they are responsible roomies.
7. Tenancy agreement
The basis of the landlord-tenant relationship is specific to your property. Use a good ‘off the shelf’ agreement or ask an experienced solicitor. Hold onto your keys until the tenant signs and pays you the first month’s rent and a security deposit.
8. Security deposit
Protection from damage, cleaning, rent arrears and so on. Sign up to one of the three Government-approved tenancy deposit schemes or face a fat fine.
This determines the value of your investment so keep your rent at market levels. Rent reviews for longer term lets are wise, but don’t go overboard with rent increases.
10. Standing orders
Made for landlords – regular, saving time and worry, problems are immediately made clear.
You have a legal obligation to provide safe premises. Furniture, fittings, and appliances must meet safety standards and come with clear instructions. Landlords must provide Energy Performance and Landlord Gas Certificates.
You can’t discriminate on race, religion, gender or disability but you can on financial matters.
Landlords have many potential liabilities, so having the right Landlord Insurance, or buy to let insurance, is crucial – covering you against damage, disasters and tenant/third party risks. Remember to take out buildings and contents insurance. Tenants too should take out insurance. You should also build an emergency fund for unexpected expenses.
If you’re no DIY expert then find a reputable local tradesman. Ensure the property is in good condition at the start, keep it well maintained and carry out periodic inspections.
Act fast when it comes to missed payments, repair work or problems with neighbours and put anything serious in writing.
You must give your tenants 24 hours’ notice before pitching up at the property.
Make sure your property is fully secure to guard against unwelcome claims.
No time to manage the property? Consider employing an experienced agent. Read the contract carefully and negotiate for fair terms.
Keep a file containing information on every property and every tenant and use a computerised accounting system
Going to court can be messy and expensive. Try to resolve disputes in an amicable way.
Once you’re familiar with the legal and safety issues above, you may find that investing in a rental property is one of the best decisions you’ll ever make!