In your decision to become a buy to let landlord, you are agreeing to take responsibility of the building that will become someone’s rented home.
Becoming a landlord is not a decision that should be taken lightly. It will be your responsibility to ensure that not only the building is a safe place to live, but also that your tenants are reliable and can pay their rent on time.
This guide is designed to offer tips to wannabe landlords.
Please note: The information in this article is for research purposes only and subject to changing legislation. Please seek legal advice in this area if you wish to pursue the points made in this article further.
If you are a first-time landlord, you should consider joining an approved letting scheme run by a professional body. This will ensure that you get the best advice and follow the best practices within the buy to let industry. The Royal Association of Residential Letting Agents (ARLA) is a good place to begin research.
If you are new to letting, then setting up property management, through a letting agent, may be for you. Letting agents handle the day-to-day management of your property and tenants. They charge a fee, depending on the level of service you opt for. A letting agent’s services can range from finding tenants for you, to managing repairs.
When choosing which letting agents to go through, it is good to ensure that they are a member of the Association of Residential Letting Agents (ARLA) or the Royal Institution of Chartered Surveyors and National Association of Estate Agents. Most importantly, you should make sure that they are registered with a Property Redress Scheme and have professional indemnity insurance.
Drawing up a tenancy agreement can be tricky, so it is best to seek legal advice for this. Initially, it’s highly recommended you draw up a 6-month agreement, as many tenants prefer short term contracts and if they turn out to be bad tenants, you will only have to wait six months before replacing them. You will need to outline explicitly the rent sum per month and any utilities costs included, as well as details of the deposit protection scheme and home inventory.
Your tenants will place a deposit on your property (usually one month’s rent) and under the tenancy deposit protection scheme, these funds will be protected. You will be responsible for ensuring that this money is put aside for when your tenant leaves, or if you need to withdraw funds to pay for damages/skipped rent payments. If you choose to furnish your rental property, or allow pets in residence, you may be able to ask for 6 weeks’ deposit to cover these costs of damages.
Deposits placed by tenants in assured shorthold tenancies agreements are protected by law under the Tenancy Deposit Scheme. It is the landlord’s responsibility to place these funds in a government protected scheme, not the letting agents. You can choose to put this money in an insurance based scheme, where the landlord pays a premium to the insurance company, to ensure these funds are kept safe. Alternatively, you can use a custodial scheme, where the tenant pays the landlord and the landlord, or agent, puts the money into the scheme.
You must gather the money within 30 days of the tenancy starting and give the tenants the following information;
If you need to use a sum of the deposit funds to make repairs, you can outline in the tenancy agreement your justifications for withdrawing funds, under the following conditions;
Landlord insurance is an essential for buy to let investments. There are many specialist insurers in this sector and the insurance will cover things like the building itself, contents cover, rent guarantee insurance, emergency boiler repairs, landlord liabilities and loss of rent.
You may be offered insurance by your buy to let mortgage lender, however, you are not obliged to take that specific product recommendation. You will however, need to arrange an insurance policy for your rental home/s. Seek advice from and independent financial advisor, who can help you find a good deal.
Please note: Check the ‘sum insured’ in your policy, as this is the total amount paid if something disastrous happens (like a fire). Make sure you are not paying too much or too little into your insurance premiums. You can do this by getting accurate estimates of the rebuild value of the property, from an expert.
Listing all the contents of a furnished rental is essential if landlords wish to protect their belongings. If this is not done and signed off by the tenants and then something gets damaged within the time of the tenancy, the burden of proof for damages lies with the landlord. To list a thorough inventory for the tenancy agreement, you will need;
Annual safety checks are required, by law, for all buy to let properties in the UK. These include;
Within your tenancy agreement, you must have outlined how rent will be increased (if applicable) and when it will be reviewed. You usually cannot raise the rental price more than once a year. If tenants have signed an agreement, you cannot review the rent until after the fixed term ends, or you have you tenants’ permission. You will need to ensure that any increase is fair and in line with average rental costs in the local area. Seek legal advice if you wish to do this.
Your tenants have the right to live in your buy to let without harassment. This means that as a landlord, amongst other things, you must give 24 hours’ notice if you wish to visit the property, you cannot just ‘drop in.’
Tenants are also protected from harassment in the form of illegal eviction (this is where the procedures for eviction have not been followed correctly). Harassment is a criminal offence and you can be prosecuted for trying to force a tenant to leave your property with abusive or threatening behaviour, carrying out unnecessary repairs to annoy the tenant, or cutting off services.
If you wish to legally evict a tenant, you will need to do the following;
Becoming a landlord is a massive responsibility, however, there are associations and letting agencies that can help you along the way. If you are considering becoming a buy to let landlord, talk to an independent mortgage broker. They may be able to help you find the best buy to let mortgage for you, with free advice and quotes.
My biggest concern was finding a mortgage with no strings attached. My options were clearly explained to me and I felt confident about the decision. Alice Silverman, Stoke-on-Trent
Compare deals from the UK's leading lenders including
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
IF YOU ARE THINKING OF CONSOLIDATION EXISTING BORROWING YOU SHOULD BE AWARE THAT YOU MAY BE EXTENDING THE TERMS OF THE DEBT AND INCREASING THE TOTAL AMOUNT YOU REPAY.
The details of financial services and products published on this site are for information purposes only and do not constitute financial advice.
By submitting the enquiry form you agree that the information provided is true and accurate and that ExpertCompare.co.uk may send the details of this enquiry to an appropriate broker for the purpose of furthering your enquiry and that the broker may contact you for further information as required. We will not send, sell, loan or lease your data to any other thrid party except those needed to provide the service you have requested.
Expertcompare.co.uk is a trading style of Candid Insurance Services Ltd. Expertcompare.co.uk helps you find quotes for mortgages or insurance products by introducing you to FCA authorised companies. The content of this site is meant to be informational, and it should not be considered financial advice. Candid Insurance Services Ltd is a registered company in England and Wales. Company Number: 07279489. Data Protection Register Number: Z3488836. Candid Insurance Services Ltd is Authorised and Regulated by the Financial Conduct Authority and is entered on the Financial Services Register under number 603273.
© 2023 ExpertCompare.co.uk