Essential Tips for New Landlords

September 10, 2013 by  
Filed under Real Estate

Many people are opting to rent out their properties to the bad sales climate within the property market. However they are not always familiar with the legal obligations and paperwork that is part of being a landlord.

You must first decide if the rental route is financially viable for your current situation. Consider the amount of time, money and effort you will need to dedicate to managing your role as a landlord, as well as the property itself. Finding suitable tenants can be a lengthy and time-consuming process, which is not advisable to rush through and simply choose the first applicant that wants to rent your property. Void periods, where you are receiving no rental income, are a hazard that comes with renting. This can be costly, and you will need to factor this into your business plan, in addition to the maintenance, upkeep and conversion costs of making your home rental friendly. It is a good idea to contact several local agents to get realistic evaluations of your expected rental income. Your tax bill may increase due to any rent you receive being counted towards your annual income and taxed accordingly. However you can offset mortgage interest payments, letting agency fees and maintenance costs.

It is worthwhile investing in your property to make it attractive to prospective tenants. A well-maintained, cared for flat is more likely to interest responsible renters as opposed to a run-down shabby apartment. See how competing local properties compare to the standard of your accommodation. Keep your target market in mind when giving the property an update. It is wise to keep the décor neutral and don’t over furnish.  As is there is a trend for more people to rent long-term before affording their own home, many already have their own home wares and furniture they will want to add to the property to create a homely atmosphere. By allowing this you will encourage them to stay longer, meaning less stress for you and lowering the risk of void periods.

Ensure that the entirety of the property is suitable for tenants to live in, keeping safety in mind at all times. This will be of paramount importance to families looking to rent your home, especially young parents. Remember that just because you have found something acceptable to live with whilst you are inhabiting the property, not all tenants will have the same view. Obtain a gas safety certificate from a CORGI registered engineer, as well as a hiring an electrician to check the wiring system throughout the property. It is also a good idea to install of at least one smoke alarm and a carbon monoxide detector. Furniture and furnishings should also have a fire safety label.

Inform your mortgage lender, in some cases your mortgage lender will remain the same. Most have separate mortgage plans and criteria for rental properties. You may find the lender forces you to switch to a buy-to-let mortgage with a higher interest rate. However you shouldn’t be tempted to keep quiet about the change in your circumstances. If you fail to inform them about it, you will be in breach of your mortgage conditions and your insurance may be invalid. This can be a costly mistake if you need to make a claim. You will need to change your insurance policy when you become a landlord and the use of the property becomes rental. You will still be responsible for buildings insurance on the property, as well as your own contents, fixtures and fittings. Specialist landlord insurance is created for this to cover eventualities.

Always treat your rental schemes as a proper business venture, with formal paperwork and procedures. This is especially important if you are renting to friends and family. These are arrangements are the most likely to go wrong and can lead to awkward confrontations. Create a formal tenancy agreement, the assured shorthold tenancy agreement is the standard for a minimum of six months lease, and guarantees you will get your property back at the end of the rental period.  Adapt your standard tenancy agreement to suit your needs and the specifics of your property e.g. if you have a garden, include regular maintenance of the garden and outside areas.  It may also be wise to include the requirement of a professional clean once the tenants have vacated the property, as everyone’s idea of clean is different. Keep your paperwork organised and easily accessible, as well as creating a detailed inventory upon each new tenant letting the premises. Making regular inspections of the property is a good idea, and you should also inform the tenants of any scheduled maintenance or improvements.

You should always add a guarantor as part of your rental agreement. This helps prevent any potential problems with missed rent payments leaving you out of pocket.

Opting to use a property management service can be of great benefit to novice landlords as they ensure all the correct paperwork is filed, as well as acting as a mediator between you and the tenants. This can be helpful if you befriend the tenants but need to enforce maintenance repairs or cleaning bills.

Author Bio: James is an experienced landlord and property manager. He is the CEO of his own residential block management company and has given advice to many tenants and landlords over the years.

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