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How can we make being landlords as painless as possible

(25 Posts)
DelBoyImNot Tue 21-Jul-15 09:19:43

We're trying to sell our home but its taking much longer than I hoped a while. We need to be in a new home by Dec for the schools applications in Jan, so we're starting to look at renting this flat out instead of selling.

Mortgage wise we can afford it, it obviously means less budget for new home but it's still do-able. But to make sure it really is affordable, I'm trying to work out how many upfront costs there are, and looking for advice on making this work if we have to do it.

We'd prefer to rent privately, and so far the costs I am planning for are:

Landlord insurance

gas certification & boiler service

Electrical checks

legal fees for tenancy agreement

Re-paint to neutral decor

buy furniture and curtains

deep clean before tenants move in

Any others I need to budget for? Your advice much appreciated; this is not a position I ever planned or wanted to be in!

Scoobydoo8 Tue 21-Jul-15 09:28:18

Find out the letting situation for unfurnished. As that is easier otherwise you can be faffing with getting new washing machines fitted etc. when they break down.

Is a deep clean needed?
You must have fire alarms.
Can you afford an agent. I let myself but had probs with non payment, it's hard to be tough, and to look threatening. Easier with letting agent who takes 12 % of rent.

LIZS Tue 21-Jul-15 09:30:37

Tbh it would be better if left unfurnished as it is unlikely tastes will match and you need to meet regulations. Insurance and maintenance policies for boiler plumbing and appliances might avoid sudden costs and get repairs done quickly. If leasehold property you need permission from freeholder to let. Likewise mortgage company. How will you fund voids - mortgage, bills , ct etc. Cost of inventory and reference checks.

GoooRooo Tue 21-Jul-15 09:31:35

I agree with Scoobydoo8 I'm afraid. We rented privately and it was a nightmare. The letting agent is worth every penny even though most of the time they do nothing - when the shit hits the fan they are worth their weight in gold.

I would look at keeping three months of mortgage payments in an account somewhere too, just in case you get non payment of rent and that gives you some breathing space.

Also - don't leave too much stuff in the flat. We moved out of ours and bought a house and rented the flat out. We thought it would be nice to leave things like toilet brushes, bathroom and kitchen bins, spare lightbulbs etc. It caused nothing but problems because tenants then expected a new toilet brush every month and for us to go there to change the lightbulbs etc so leave the bare minimum.

LIZS Tue 21-Jul-15 09:33:51

Oh and you'll need to call hmrc in case you need to register for a tax return . You may even be due a repayment at end of tax year. Check with your council about current fire regulations . They are changing to include smoke alarms etc.

DelBoyImNot Tue 21-Jul-15 09:40:39

Hadn't thought of maintenance polices, thanks will look at that - would much rather have regular known outgoing than sudden big cost.

RE furniture we've been advised to be flexible - offer it unfurnished but be preared to provide the basics like beds and sofa. So am budgeting for buying it just in case.

GoooRooo I was just wondering whether we should leave our old cleaning bits in the flat (dustpan etc). I won't now, thanks! And good idea re 3 months rent. We have some cash savings which were marked for a new home, we could probably set some of that aside for covering non payment.

My main reason for not wanting an agent is that they all charge tenants a fee round here and I just feel so uncomfortable with that. I feel uncomfortable being a landlord anyway but maybe thats mumsnet lefties making me guilty about owning two properties. I think one agent near us offers estates management type services even if you find the tenant so I was considering something like that if the numbers work.

blessedenough Tue 21-Jul-15 09:43:54

We are doing exact same thing but have rented out properties before.

You need to put in carbon monoxide alarms as they will become a legal requirement in October.
We manage the rental ourselves after several bad experiences with letting agents and the cost! Now use an online tenant finding service.

Tenant deposit scheme, decide which one you want to use. Independent inventory check aprox £50-75. Proper referencing g and credit checks of tenants are vital, lots of people provide this. Consider joining the national landlords association, they offer legal advice £80? Year.

We are leaving our old curtains as they are in good nick but will have them cleaned first. We have repainted coloured bedrooms and have repainted in neutral colours hall and stairs etc. The living room we have freshened up as was only done a few years ago and I don't think every wall magnolia is very appealing - its nothing to loud however.

When we leave we will get carpets professionally cleaned, they are only 2 years old but have acoup!e of marks they will come up as new.

Decide if you will allow pets, I once allowed a budgie in a cage and thought how much damage can a caged bird do- nibbled all the wooden doors!! Might allow pets here as its a family home.

You will also need to consider accountancy fees, or do it yourself.

Good luck

PestoSwimissimos Tue 21-Jul-15 09:44:49

The bane of my life is getting together all the figures required for my Tax Return, so make sure you are happy to keep stringent records of all your income & outgoings.

DelBoyImNot Tue 21-Jul-15 09:46:30

Thanks blessed (and all of you) this is so helpful.

DH is a trained accountant so that will be ok, but its good to be able tot up all the other bits. Off now to start checking costs online and adding it to my spreadsheet. Then to compare that with our savings and see if this is really something we can afford....

blessedenough Tue 21-Jul-15 09:55:50

Our online tenant finding service is £70, the local letting agent who in my experience just put the first person who want it in wanted to charge one months rent to do exactly the same thing!!! With the online agent I conduct the viewings myself so hopefully will meet someone who I can work well with as its a people business. Ex tenant who ll agent found was an alcoholic who likes to beat up his gf, I am hoping I would pick better.

I try really hard to be a good landlord and fix things promptly, I don't crowd my tenants and respect its their home however I am firm, if they mess me about and esp if they lie to me I don't renew their tenancy.

blessedenough Tue 21-Jul-15 10:00:55

Final thing I have 6 months mortgage payments for void periods, non paying tenants and repairs and maintence. I won't make hardly any profit - maybe a couple of thousand, which could be wiped out if boiler needed replacement etc but it was this or loose forever family home. I am the very definition of an accidental landlord.

We are on a fixed deal and will review at the point it ends.

specialsubject Tue 21-Jul-15 10:09:07

check that landlord insurance - it must have cover for malicious damage (at least two big names don't include that). You also need legal expenses cover (evictions if needed cost ££££ and take months) and rent guarantee insurance. Which means stringent tenant referencing.

also get home emergency cover; tenants can't wait two weeks if you are on holiday when boiler breaks etc.

as mentioned, smoke alarms and CO alarms will be mandatory shortly, but they cost peanuts. However if the property was built after 1992 they must be mains wired; building regs mean they should be there anyway.

re lightbulbs; fit the whole place with new low-energy ones and make sure they are on the inventory. That means you get money back from the deposit if the tenant doesn't replace them or puts in grandpa's old 100W bulbs.

leave copies of all instruction manuals, plus a max 2 page quick start guide.

the tax/accounting is not complicated as long as you keep proper records. You will need to do a tax return.

anything you provide, you fix - so keep it minimal. Carpets, curtains, light fittings and bulbs, kitchen, bathroom fittings, a cooker/oven plus other white goods IF local market does that - it varies. Don't provide cleaning gear etc, it is not a holiday let.

PetraStrorm Tue 21-Jul-15 10:09:53

Have me as a tenant grin. Seriously though, I'd say pick your tenants carefully, and always always meet them and try to get a proper feel for what they're like.

I wanted long term, unfurnished, for me and my 2 kids (leaving ex's house when we separated) and I think I look after the house we found properly as I see it as our family home (or as near as I'm likely to get until I can buy).

If you're prepared to consider pets on a case by case basis you'd be a dream landlord. We were here 2 years with a no-pets clause in the contract, but after that I asked the landlord if we could get a dog and he agreed (because by now he trusts me to look after the place).

My landlord is pretty hands-off, but there when I need him for stuff (not often) and I respect his leaving us alone by looking after his house properly and never ever mucking him about financially.

DelBoyImNot Tue 21-Jul-15 10:13:44

I'm not expecting we'd make profit either, like you blessed it's a choice rather forced on us. We could stay where we are but we don't want to be here more than a few years (we've already outgrown the flat) so if we don't move now it will mean relocating children who will have started school and I'd rather not do that unless we have to.

Obviously it would have been better if we worked all this out sooner and put house on market last summer but you live and learn...

SauvignonPlonker Tue 21-Jul-15 10:48:29

Personally, as a first time landlord, I'd use a letting agency. I would go with a personal recommendation & choose very carefully. There is a tendency to think that being a LL is a piece of cake & easy money.

Here's a few scenarios to think about;
How would you manage these situations:

- it's 3am & you get a phone call saying your property has been broken into.
- the washing machine breaks down unexpectedly, flooding the neighbour below, who says she will sue you for damages.
- tenant says they are unable to wait in for new machine to be delivered.
- you are away on holiday abroad when you get a phone call about a leaking pipe.

I used to self-manage & eventually appointed an agent as it became increasingly difficult to do around my employment. Plus there is so much legislation (Legionella, anyone?) to comply with.

I could write more (eg lawyer to draw up tenancy agreement, getting permission to let from lender or changing to BTL mortgage on property). There's a lot to think about.

wowfudge Tue 21-Jul-15 10:54:28

Pps have provided great advice. The only thing I would add is that while you should fix any bits and pieces that need doing, but which you have put with while living there, you do not need to re-decorate. Unless there is some outlandish colour scheme which might put a prospective tenant off it's not necessary. Anything tatty or worn then do address it.

I wouldn't let the place furnished - apart from anything else if you have a void period it can affect how much council tax you have to pay: there is usually no discount available for a LL of an empty furnished property.

Is your flat leasehold and does the lease permit subletting? If not you're in trouble.

While smoke and CO1 alarms should be fitted, you do not need to fit a fire alarm if you are renting the whole place to one tenant/family.

If you are going to use a letting agent, ask to see copies of their Ts and Cs before you sign up, their terms for tenants and details of all charges levied and the standard AST they use. Some agents put clauses in ASTs which will not stand up legally and cannot be enforced. Do request regular inspections and inspection reports.

DelBoyImNot Tue 21-Jul-15 11:20:19

we have a share of freehold but its still technically leashold so I'll check that, thanks.

CO1 alarms, we should have them anyway, shouldn't we. I'll make that a priority.

If we don't use an agent (or indeed, if we do) how often would you advise inspecting?

Petra I'd consider pets in a case like yours though to be honest its not a very pet friendly home (small garden, main road). I expect our market will be young professionals or students (obv I'd prefer the former!)

SauvignonPlonker Tue 21-Jul-15 11:29:52

My agents inspect 3-6 monthly & take photos (also good to do at beginning of tenancy for evidence in deposit disputes) & provide a written report.

Also consider future changes to taxation in budget eg loss of wear & tear allowance, mortgage interest relief. It could make the difference between breaking even & running at a loss.

PetraStrorm Tue 21-Jul-15 12:30:00

There are a LOT of student rentals where I live - vastly more than family/professional rentals. They charge a hell of a lot more rent (per room per week) than family/professional rentals but I'd imagine their maintenance costs are also massively higher.

The student houses round here seem to have lots of work done on them every summer. It all looks like a huge headache but possibly a profitable one - that's only an outsider's view though.

PettsWoodParadise Tue 21-Jul-15 12:32:03

Openrent is free for first advert then £29 and it goes on Zoopla and Rightmove etc - we've never been disappointed with their service. They have add ins like inventory but we haven't used them. We prefer to manage ourselves and it works out well. Make sure you read up well on deposit protection as that is a minefield but not impenetrable. We use Equifax for the finance checks which is about £20 and the only thing we charge back to tenant which is unlike some agents who charge tenants a fortune. Some tenants target new private landlords as they know they will be green so do be careful. We know of someone who took in a tenant who paid up six months in advance and then didn't pay a penny as they were in gaol and the house was overrun with dodgy plants shock. It isn't without risks but can also be rewarding.

DelBoyImNot Tue 21-Jul-15 12:46:25

PettsWood, I bet that was a pretty heart-dropping inspection....it's things like that which make me nervous, and the fact that this is an older house so it can be a bit of a money drain anyway. We're budgeting 15% of rental income to go to maintenance each year, which is more than right move calculator recommended, but perhaps its still too little?

GoooRooo Tue 21-Jul-15 15:21:16

I haven't spent anything like 15% on maintenance. More like 5%. It's a new build though so maybe that makes a difference.

PettsWoodParadise Tue 21-Jul-15 19:46:55

15% of gross rent for us would be about £175pm per property. We don't spend this on a day to day basis but we do have the gas contracts for peace of mind. The big ticket items also probably add up to that sum, for example soffits one year cost about £3k and in a few years we will need to upgrade the kitchen which will cost a similar sum. These can only be offset against CGT as I understand it, but it sounds like you have the accounts covered.

We do have a clause in tenant contracts that says that small maintenance items are their responsibility for example screwing back on a toilet seat handle, lightbulb replacement etc. We get them to confirm they've checked smoke and carbon monoxide testers and put in writing. We also have a mould management clause as we have had tenants stay with no problems then a new set come in and block up vents and air bricks etc and dry clothes on radiators and then blame us for mould.

Join an association like the RLA to get access to documentation and updates. If you have leasehold property you will need to include clauses in your contracts that reflect any requirements in your leasehold such as cleaning windows regularly etc

Good luck!

Scoobydoo8 Tue 21-Jul-15 21:55:41

You can set 10% of rent for wear and tear against your tax annually - though this is going to change in the next few years (too right) after the last budget.

specialsubject Tue 21-Jul-15 22:11:00

the 10% is currently only for fully furnished properties. It is abolished from next April, in its place all landlords can claim some tax relief for work actually done.

fair enough, really.

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