If you are interested in buying a property to let, leasing a second home, or renting out a room in your house, then this handy checklist can help you get started down this new path on the right foot.
Like any business enterprise some market research should be top of your list. Here are a few things to think of before you get to work!
- Are rental properties in demand in your area?
- What are the most common groups of renters in the area? E.g. Families, students, young professionals.
- How much rent is being charged for similar properties nearby?
- Is your property suitable and in good repair to rent out now?
Next consider how you would like to advertise the property. This will have an impact on the people that are interested in becoming tenants. For instance, students would likely want a furnished or part-furnished property, whereas a family might prefer unfurnished. Other aspects to think about include:
- Will you allow tenants with housing benefits?
- Will you allow tenants to keep pets?
- Will you allow tenants to redecorate?
- Will you allow smokers?
- Will you ask for a guarantor?
- If you’re a live-in landlord, how will essential bills like food, utilities and council tax be managed?
An important element of leasing your property is to consider how hands-on you will be when it comes to managing the property.
Will you take on the maintenance, legal issues and missed payments yourself? Or will you hire a property manager or lettings agent instead?
If you take on a lettings agent, take into consideration how much this will cost you.
While you are considering this, it’s obviously easier to make repairs when the property is empty. Before you let it out, there are some general areas to check are in good working order:
Utilities, health and safety
Gas – ensure that all appliances are safe to use. You must provide the tenant with a copy of a gas safety certificate from a CORGI approved service.
Water – check the boiler, hot water supply, baths, showers, sinks and toilets.
Electricity – make sure that all appliances are working efficiently. Contact an accredited Domestic Energy Assessor (DEA) to carry out the necessary checks and provide an Energy Performance Certificate.
Fire – Fire Safety Regulations labels must be on all furniture in a furnished property. Fire extinguishers, fire safety doors and fire blankets should also be installed.
Find out more about safety regulations and legal requirements for londlords >>
Advertising the property
The simplest way of raising awareness of your rental property is to work with an agency. They will take on the leg work for you and can arrange viewings, secure tenant references and investigate tenants for convictions, credit history, bankruptcy, etc.
Signing the contract
It’s likely you will have an Assured Shorthold Tenancy (AST). Take care that the terms of the tenancy are clearly laid out; this should include a clause on paying rent on time, maintaining the appearance and cleanliness of the property, terms for getting hold of you or the property manager, etc. You should also specify responsibility for utility bills, council tax and phone or internet services.
In most cases, you’ll also take a deposit. Usually one month’s rent, this will cover issues like unpaid rent or damage to the property. You should secure the deposit in an authorised Tenancy Deposit Scheme as this will be returned to the tenant at the end of their tenancy, assuming the property and relationship is without issue.
Sort your affairs
As a first time landlord there are a few bits of paperwork to complete. You must declare your rental income to the Inland Revenue because you will need to pay additional tax.
You should also arrange landlords insurance. Normal home insurance will not cover you in the event of needing to claim for an accident or damage to the property once you have let the property out. As soon as you have agreed who your tenants are, then you can arrange your landlords insurance.
HomeProtect offers comprehensive cover for first time landlords with options of either just Buildings or Buildings and Contents cover if you are letting the property furnished. Public liability insurance cover is included in your policy.