Six steps new landlords must take
The latest research conducted by the National Landlords Association shows that 24% of landlords in the UK entered the buy-to-let market accidentally or unintentionally.
Part-time landlords – or those the NLA identifies as landlords who supplement their day jobs with rental income – now number about 360,000 people in the UK.
The reasons for taking on a second property are varied. Of those 360,000 part-time landlords…
- 11% inherited a second property;
- 5% moved in with a partner;
- 5% experienced difficulties selling a property; and
- 3% had to relocated either domestically or abroad for work.
While the majority of part-time landlords supplement their income by letting out their second properties for a profit, 30% of landlords who rent out a single property either break even or make a loss.
Carolyn Uphill, chair of the NLA, comments: “It may be surprising to find that so many single-property landlords struggle to make it work, but we often find that this is because so many simply don’t realise what they’re getting themselves into.”
Of course, being a landlord can be very rewarding, but a part-time landlord will typically have a day job, which will limit their time to manage and maintain their second homes.
However, as soon as you start taking money from a tenant you have become a professional landlord, and you have responsibilities.
Here, we examine six key steps to take before starting the search for tenants…
1. Contact your insurance company
If you fail to inform your insurer that a home is being used as a rental property, your insurance policy will most likely be invalidated.
We also advise that you take out public liability insurance to protect you against any incident that takes place in or around your property.
2. Get in touch with your mortgage provider
If you still have a mortgage on your rental property, you will need to inform the provider about its change of use. Depending on the type of mortgage you have – and who you have it with – you may have to switch or alter your current contract.
3. Call the lawyer
All landlords must comply with an ever-growing list of legal obligations. These range from ensuring any deposits are placed in a government-backed tenancy deposit scheme to protecting your tenants’ safety by carrying out Gas Safety tests and installing smoke alarms in the rental property.
4. Get you tax right
HMRC classes all the rent landlords receive as income, which means it must be declared on your end-of-year tax return. However, there are a number of tax deductions that landlords are entitled to claim. These include mortgage interest charges, letting fees, repairs and maintenance and energy efficiency improvements
5. Draw up a proper tenancy agreement
The majority of UK landlords use an Assured Shorthold Tenancy Agreement to let out their properties. This is a legally-binding contract between you and your tenant(s), which lays out the terms and conditions of the tenancy, such as duration, rent and late fees.
A tenancy agreement not only protects a landlord’s interests by allowing them to evict tenants if they break the terms of the contract, it gives tenants peace of mind that they have a legal right to remain in the property.
6. Put together a full inventory
The moist common type of dispute between landlord and tenant involves claims for damage to the property. An inventory can get round this issue. We suggest that you take photos and/or videos of the property itself and any items you are including as part of the tenancy – down to the last scatter cushion.
At the beginning of the tenancy, you should ask your tenant to sign the inventory to confirm that everything that it lists is both present and in the stated/shown condition.
If an item of furniture is not included on the signed inventory, your tenants will not have to pay for any damage to or loss of that item – even teaspoons.
How Assetgrove can help
Don’t let finding yourself with a property to let anywhere inside the M25 fill you with dread. Letting agents in Bromley, Camden, Hillingdon and the capital’s 29 other boroughs all report that the rental market in London is extremely strong.
But that is no guarantee of success for landlords. To discover how you could receive guaranteed rental income every month for up to five years, contact Assetgrove today.
As rent guarantee specialists, we have tenants waiting and will take on your property immediately. We respond to enquiries within 24 hours and for added peace of mind we also undertake any refurbishment works for landlords and offer finance solutions to make these a reality and avoid delays in renting a property.
Our in-house team is also able to provide Gas Safety, Electrical NICEIC and Energy Performance Certificates within 24 hours and carry out day-to-day maintenance of your rental property. In short, our aim is always to help you maximise your rental income.