A Starter Checklist For Landlords…
If you own a property which you are planning on renting out, with or without the assistance of a letting agency, there are several considerations worth bearing in mind, so I thought it might be worthwhile to put together a 10-point checklist…nt 24 hours’ notice of this.
1. Furnished or not?
Before you do anything else, you should probably decide whether you are going to let your property furnished, part-furnished or unfurnished. Any of the above are fine, but if you are going to be advertising the property using photographs, you will need to first remove any furniture which won’t be there when the tenants move in. At Carlean Lettings, we have a mixture of furnished and unfurnished properties but if you are going to furnish, you must ensure that all of your furnishings meet current safety regulations.
2. Is it clean?
Maybe it sounds obvious, but nobody wants to move into a dirty property. I would recommend having a professional deep-clean done before you embark on your search for the right tenant. I would also advise paying for a professional clean of the oven – you do it once, then advise your tenants that it has been professionally cleaned, provide proof of this and let them know that they are expected to have it professionally cleaned when they vacate – they can arrange it themselves or agree to the cost being deducted from their deposit.
3. Advertising
Where/how will you advertise it? Most people, whether renting or buying, do their initial property searches online, so you may want to consider using one of the online property portals. If you do this, you will need a selection of good quality photographs illustrating the property at its best, demonstrating its appeal to any prospective tenants. It is also a good idea to have a professional floor plan done, as many people find it difficult to visualise space. If you use an online agent, be aware that you will have to do your viewings yourself. If you are not comfortable with this, I would advise using an agent for a tenant-find service.
4. Safety and insurance
As landlord, it will be your duty under the law to provide a working smoke alarm on each habitable floor and a carbon-monoxide detector in any room capable of burning fuel. You must also provide your new tenant with a Gas Safety Certificate and an Energy Performance Certificate (EPL) at the start of their tenancy.
As it will be your responsibility to take care of any structural failings that may occur during the tenancy (also heating and hot water systems, plumbing, etc), landlord insurance is a must. This should also provide cover for unforeseen repair costs, such as damage caused by storms, floods or fire. Should you need to enter the property at any point to make repairs, you will have a legal ‘Right to Enter’, but you must give your tenant 24 hours’ notice of this.
5. References and Right-To-Rent
Again, a letting agency can help you with these if you find it all a little daunting. The reference check would ordinarily include the usual checks on a prospective tenant, such as bank statements, employment details and references from previous landlords.
As well though, it is worth knowing that it has been a legal requirement since February 2016 for landlords to carry out an ‘Immigrant Right-To-Rent’ check. Essentially, you need to know that your tenant actually has the right to rent property in the UK. The check will include identity documents (such as passport or identity card) and any other documents such as, for instance, a permanent residence card, which show they have indefinite leave to remain in the UK.
Be vigilant with these checks, as failure to properly carry them out could result in your being fined £3,000 per tenant. A comprehensive check from a reputable credit-check agency will cover this, or use a letting agency, as this should be part of their tenant find service.
6. The tenancy agreement
This is the contract between you, the landlord, and the tenant. It gives them the right to reside in your property and you the right to collect rent for that period. An Assured Shorthold Tenancy (AST) agreement will cover such things as landlord, tenant and property details, rental payments and when they are due, the duration of the tenancy and the notice period.
You will find many templates online but be aware that this is a complex area and needs to be right and lawful. Should your tenancy go wrong, you will be relying on this should you need to start possession proceedings, so cutting costs now may not be in your best interests.
7. The deposit
The tenancy agreement will spell out the details regarding the tenant’s deposit but, as landlord, you are required by law to place this deposit, within 30 days of its being paid, into a Government-backed tenancy deposit scheme. The three approved schemes are the ‘Tenancy Deposit Scheme’, the ‘Deposit Protection Service’ and ‘My Deposits’.
8. The inventory
Firstly, remove anything from the property which doesn’t need to be there. Then I would recommend employing a qualified inventory clerk to prepare the inventory as, should you have issues at the end of the tenancy, you will be reliant on this if you wish to withhold any of your tenant’s deposit. When your tenant moves into the property, I recommend a formal check-in where you go through the inventory and they sign to say that they agree with its contents.
9. Financials
Keep in mind that you will probably be paying income tax on your rental property (although you will be able to claim back the costs of day-to-day running expenses), so consider setting up a separate account for this. You may also have to pay Class Two National Insurance, if the rental is deemed to count as running a business.
10. Disputes
If you have done everything listed above, hopefully there won’t be any! But if there are any disputes, in the first instance speak to your tenants, as it may all just be a misunderstanding. If this doesn’t work, you may need to write a formal letter in which you address your concerns.
The next step would be to use a mediation service, which would save on the costs of going to court. But, in the end, you may have no alternative other than to take your case to the Small Claims Court, which will adjudicate in cases involving sums of less than £10,000 (or £1,000 if the case involves repairs), which is why it is vitally important that your tenancy is set up correctly.
So that’s it, my 10-point checklist for new landlords looking to rent out their property. Many people choose to let and manage their own properties without any problems. If this works for you then that is great, but I have built my business on using the right person for the job and that is why my advice would always be to employ a letting agent.