Becoming a landlord is no small decision. It can give you monthly income and allow you to acquire properties that can be used for retirement funds and inheritance. Before you make this huge business, career, and financial decision read our quick guide on things you should know before you become a landlord.
Join an association
There’s far more to being a landlord than buying a property and charging rent. There’s lots to learn and pitfalls to avoid. You can find help and guidance here at Rentila but by joining an association you can benefit from discounts on courses that will give you expert knowledge on things like tax laws, electrical safety and basic courses on letting.
The National Landlords Association also runs regular meetings so you can get up-to-date info and meet like-minded people in the same business with valuable contacts such as good tradespeople. Annual membership starts from £84.
Don’t skimp on insurance
If you’re buying-to-let, then your mortgage company will insist on you having insurance. But you’ll only need to get insurance to cover liability and building and contents. However, many more things can go wrong than storm damage. The most likely thing that goes wrong with rental properties is the tenants. It’s very easy for tenants to cause damage either intentionally or otherwise that way exceeds the deposit of one month’s rent.
And you may also have tenants that willfully or due to lack of funds do not pay the rent and refuse to leave. A drawn-out eviction process could cause months, throughout which you’ll have no income to pay your monthly mortgage. For an additional premium, it can cover you for these eventualities. Then if your tenant is late paying the rent, you need not panic.
Vet your tenants well
Having bought a property regardless of how much or little time, love, and money went into renovating and redecorating, it’s still your investment. You need to have the best chance of knowing your tenants will be good payers and not damage your property. Just because a tenant is well dressed with a killer smile, does not mean a thing. In addition to which it’s now the law to carry out a right to rent check on all tenant’s and a failure to do so can result in a fine or up to five years in prison.
Aside from checking whether someone has a right to be in the UK, there are also credit and criminal checks to consider. Usually, a simple credit check will suffice. But you can grab a more thorough free credit check from joining Experian’s Rental Exchange, which covers details of rent payments.
Having criminal checks done is also an option. While asking your prospective tenant whether they have any unspent criminal convictions may not be the easiest question to ask, then any employed tenant will have had the question asked before they started their job. If you don’t ask then you risk invalidating your buildings insurance and for good reason should your would-be tenant have convictions for criminal damage including arson. Anyone without criminal convictions for theft, fraud, assault, battery, burglary, and domestic violence – you’d probably choose not to rent to – is unlikely to be offended.
Finally, you can also ask for references from previous landlords and proof of earnings so you know they have the ability to pay the rent and bills. If that seems like a lot of checks, it only amounts to tenants providing a few documents, and it will be worth it to ensure you have well-referenced tenants who will care for your property and can pay the rent.
Look after your tenants
Having moved in great tenants, take care of them. Trust them to look after your property without snooping around to check unannounced. If you need to check on something, make sure you give your tenant’s notice. Be quick to deal with any repairs and issues.
A card at Xmas costs pence and goes a long way in terms of being pleasant. You can even buy a small moving gift such as flowers. All of these things will help you keep your tenants for the longest amount of time possible and keep your dealings with them friendly.
Know who to turn to in an emergency
When you are going into this business, then one of the things you need to know before you become a landlord or at least along the way is a trusted set of tradesmen. If your dad is a plumber, and your brother-in-law is an electrician and you are great at fixing odd jobs, then great. If not, then use a service like mybuilder.com.
The platform works by you posting your job up and qualified tradesmen in your area will contact you. The platform is based on clients reviewing tradesmen, so you can ensure you are getting a good service at a reasonable price. You can either keep the contact details of tradesmen from mybuilder.com or use the service, time and again.
Make sure you don’t break the law
As mentioned earlier, if you don’t check on a tenant’s right to rent, you could be in for a heavy fine or imprisonment. There are several things you need to conform to when you are a landlord that also carries similar stiff penalties. You must store a tenant’s data accurately and securely.
You also need an annual gas certificate and carry out PAT testing on electrical appliances you provide in the property. In addition, you need an Energy Performance Certificate (EPC), which costs from £60-120. An EPC assesses things such as insulation, double glazing, and heating systems to give a guide to how efficient the property is and the likely annual energy bills.
Remember you’re running a business
With just a few tenants, it’s easy to fall into the trap of thinking you’re not running a business. But you are, so don’t forget it. If you choose tenants wisely, then they may stay for years. But five years down the line, it’s fair to put the rent up a little without offending. Similarly, if your tenant’s run into financial difficulties, then be sympathetic and helpful, but don’t let rent arrears run past a couple of months.
Landlord’s checklist: Important things to remember
If you follow this guide of things to know before you become a landlord, then you’ll have a good chance of avoiding common mistakes. Here’s a rundown of things to remember:
- Joining an association can help you network and learn more about this new business
- Additional premiums on your landlords insurance can cover guarantee your rent and cover you for every eventuality giving you peace of mind.
- Vetting your tenants is crucial to preventing property damage and having your rent paid.
- Treat your tenants, so they won’t want to leave, saving you thousands on re-advertising and redecorating.
- Use a platform such as mybuilder.com to find reputable tradesmen for any job.
- Make sure you comply with current legislation and get all the checks and certificates you need.
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