New to being a landlord, any words of wisdom?(26 Posts)
I am about to rent out my house after moving in with my partner.
I only have a small mortgage so I can afford to pay it with or without tenants.
I have had all the usual checks for electrics, gas etc and ive spruced it up, decorated, some new carpets.
I just wondered if there were any words of advice that you have for a first timer. I intend to advertise and manage it myself as I cant think there will be any major problems. I wonder do I need landlord insurance or will building insurance be fine? How many references should I ask for? Should I see prospective tenants in their current home to get a sense of what they are like?
Any advice gladly taken, thanks
Going to be rude here, you cannot ask how to be a landlord on mn, there is a huge amount you need to understand and do and from your post you don't have a clue. Think that you are letting total strangers live in something worth over £100,000+ your greatest asset and get some help from a professional, join an organisation that will help you or start reading. I am still learning after 25 years in the business.
Oh, I don't know, Royston, it's not rocket science! We did the same some years back.
OP, it might be easier to get a management company in to run it. They will deal with contracts, vetting potential clients, arranging gas and elec safety checks and on on.
Mind you, we had a crap experience with our letting agent, and there have been lots of thread on here about useless letting agents.
There's lots of advice here: www.gov.uk/browse/housing-local-services/landlords and here: www.propertyinvestmentproject.co.uk/blog/guide-new-landlords/
Most important things to consider: Nobody else will look after your house like you do. Don't be emotionally attached to it. Do regular inspections so you can see how tenants are looking after your house. The eviction process takes months (yes, we had to evict tenants). Get as many references as you can for prospective tenants. Keep the tenants' deposit in a protected scheme.
You need to tell your mortgage company that you are planning on renting out and they may want you to have landlord insurance.
My advice would be to get an agent to manage things. We rented our house when we lived abroad and had two different tenants, both of whom failed to pay their rent for months as they were waiting for housing benefit claims to come through.
The agents dealt with it (not massively quickly, but it did get sorted, and saved us trying to do it from abroad).
On the same topic, perhaps don't accept people who live on benefits as that is what caused our problem - not the tenants but the benefits system being slow (although one of our tenant's guarantor did refuse to pay up too, when it got to that stage!!).
Don't assume your tenants will respect you or your property might also be a good tip. Sad but true.
But if you are lucky enough to get decent tenants, it could be a positive experience.
Note the some years back cocktail, new rules and regs have come thick and fast recently; you have to know what you are doing nowadays and continually keep up to date whilst the tenancy is running, sorry but it is naive to think you can just wing it following a few chats with strangers on mn.
I would strongly recommend you appoint an agent. You have no idea how vulnerable you are until you have a bad tenant.
Unless, of course you are an expert in law, date-stamped inventories, legionella etc etc. Have a quick google of your legal responsibilities as a LL, and the eviction process. If that doesn't put you off.....
At the very least, you should use an agent for tenant-finding, and a separate inventory clerk for check-in/out.
But the fact that you're asking about whether you'll need LL insurance on a parenting forum would say to me that you have a steep learning curve ahead.
I realise I'm being pretty blunt, but I think there are a lot of clueless amateur LL out there who have no idea what they're letting themselves in for. Of course there will be those who say it's easy, but the days of downloading a tenancy agreement online & doing a gas safety check are long gone.
Take a look at the Landlordzone website - it has a forum - it'll be an eye- opener!
You can get an agent to do the tenant finding and vetting for you and then manage yourself.
In all honesty it is a pita. We just used an ea to manage and then all you have to do is pay the invoice everytime something breaks etc!
Depends on the type of house to be fair. Ours was a 1 bed house so new tenants every year or so for about 10 yrs. if you have a family sized house it should be better though.
As a tenant I would agree with pps, if you don't know the basics get an agency. Also, I would never apply for a tennancy where the ll wanted to visit my current home, my references will tell you all you need to know. It's a huge invasion of privacy.
Get an agent to do the tenant finding and vetting for you and then manage yourself if you feel you'd like to. I have self-managed for a few years but have now appointed an agent to manage things as I got fed up of dealing directly with tenants.
Get landlord's insurance.
Make sure you have all the necessary smoke/C02 detectors in place - there was some change in the law late last year, not sure if it will affect you but do check.
Most importantly, make sure tenants are vetted fully before they get access to you property, by a 3rd party like HomeLet. Don't just rely on bank statements / payslips (you can buy them off the web for a fiver), or a verbal reference from the last landlord (could be a mate), or because you have a "good feeling" about the tenant.
Make sure you have "consent to let" from your lender, or a BTL mortgage.
Use a proper contract, not a freebie off the internet.
Protect the deposit promptly.
If you're even slightly fussed about property condition, get a formal, 3rd party inventory done.
I know it feels like unnecessary expenditure now, but my God you'll be grateful for it when/if things go wrong.
Yes, you do need landlord insurance for buildings, contents, malicious damage, legal expenses and maybe rent guarantee. Home emergency also a good idea. Tenants can't be left with a broken boiler just because you are on holiday.
An inventory is a very good idea.
You need to be fully aware and compliant with your legal obligations, or risk fines or inability to evict. Right to rent, deposit protection. Epc , smoke alarms and so on.
We manage our own rental property and always have, its fairly straight forwards. One of the reasons i dont like using an agent is they pile on the charges for the tenant. They wanted to charge £150 for a credit check and then £120 contract renewal fee every 6 months, i felt this was unfair and over the top. Not too mention paying 8-12% of rental income for them to do very little.
Gas safety checks, nationality checks, legonella checks, fit and test smoke alarms. Make sure you pay for an independant 3rd party inventory which is signed off by the new tenants - this is your safety net should you have any damage and need to claim against their deposit. Obvs use a deposit scheme and provide the tenant with the details at the start and after the 6 month ast ends.
I interview all tenants myself and lay out clearly what is my responsibility and what is theirs. I also put all of this in writing. I carry out credit checks (which the tenant pays for) and referencing using a 3rd party but i ring the referee myself and speak to their previous landlord.
I dont allow pets - you should see the damage a budgie can do - never again!!
I make sure the house is in very good condition and fix any problems immediately. I prefer families who put their children in the local school as they are usually more of a long term bet and its a family home. I want long term happy tenants who will treat the place like their home. I do house inspections but very rarely and usually only at the 4 month stage.
I accept that wear and tare will have a massive effect and that the house will not be brand new when i get it back. I allow my tenant to decorate ( colour approved by me) and i pay for the paint within in reason, the stipulation is if its terrible they must put it back at the end of tenancy - so far no one has taken me up on this offer. For deposit purposes a new carpet would have an aprox 4 year lifespan.
I use an online letting agent to find me a tenant and deal with initial enquiries and then i take it from there. They also sort credit/ referencing checks, the contract and the inventory.
I use an accountant to do my books. Dont forget you need to register your business with HMRC within 3 months of setting up.
I have landlord insurance which covers the property and the fixings but the tenant has contents insurance. When you have a good tenant who pays on time and looks after their home its an easy job - when you get a nightmare tenant its a nightmare!
I always go with my gut reaction and so far have had few problems in 10 yrs (touch wood, fingers crossed etc).
Good luck its very doable but you need to do your research and go into this with your eyes open. Landlord zone is a very useful resource.
I sold my house because the continual changes were making it a PITA.
You do need LL insurance.
I would recommend getting an agency to find tenants, do all the vetting and checks that are now required, sort the tenancy agreement (but check this yourself first) do the inventory and hold the deposit. You have to have bullshit things like a legionnaires disease risk assessment!
I would also pay to get the agency to manage the property unless you have a tame handy man on call. It is money well spent in my eyes.
I was in a very similar position 15 years ago. I let my old flat when I moved in with my now husband.
I'm still letting and generally it's been ok. Only one real problem tennant in that time and only a short time ever without a tennant.
Even after 15 years though I wouldn't let without using a managing agent. Rules change all the time and without an agent I wouldn't know about the changes. There are many things to be aware of that you haven't mentioned so probably have no idea about ie carbon monoxide rules, PAT testing, gas safety certificates, deposit protection schemes etc. as just some examples.
I use an accountant to do my books. Dont forget you need to register your business with HMRC within 3 months of setting up.
I do not think that is correct.
You only need toinform HMRC within 3 months of setting up if oyu are running a property business which the OP is not doing.
She does however need to request a self-assesment tax return and declare her income and expenses and pay tax on the profits from the property income.
Ok, some interesting / rude responses there.
Princess you seem to have a similar attitude to me, I am looking for long term tenants with children who will treat the house like a home, (with all the wear and tear that entails).
I have been a tenant myself on numerous occasions, including as a single parent, and on benefits and have had both lovely and awful landlords.
Thanks for the advice about landlord insurance.
I am aware of the legal obligations, my dad rents property as well. I was hoping that by managing the property myself, I would have a good relationship with the tenants.
I wasn't asking 'how to be a landlord', or hoping to 'wing it' I was asking for personal experiences over and above the legal spiel.It seems that lots of people have had awful experiences letting property, this is not something I would choose to do if hadn't been for circumstances. Englisgirl, thanks for the point about visiting your home, you make a good point about references.
Thanks for the feedback, I shall look at Landlord zone.
Does your dad let property in the same area? If so it makes a big difference if you can use his handy man to pop over and fix things.
Also look at the National Landlords Association.
If you get an agent to find tenants and manage the contracts, while you manage the prperty itself, that may work best, unless you are a long way away in which case get them to manage it all, but ensure the tenants have your contact details.
Having rented out rooms and flats and prepared another for renting, it's not that meeting requirements is so difficult but it is time-consuming if you have another job - letting agents may seem high but while some of their places may be easy to manage, others will require a lot more time. Evicting anyone should it become necessary will take about 4 months, plus potential renovation after, so you want to avoid that where possible!
You will need landlord insurance, an EPC and a gas safety certificate - don't get the agent to do these as they will be much cheaper from somewhere else (eg local agents charge £100 to £150 for an EPC, or £30 from the assessor direct).
There was the awful thread where the tenant accidentally burned the house down. The landlord hadnt told insurers or mortgage company that they were renting it out. Result - a mortgage to pay on an uninsured ruin. That's the extreme example of what can go wrong.
Being a landlorld is a profession - you need to learn loads of things and keep that info up to date, it changes constantly. Whether you have 1 or 20 properties, it matters not - you have responsibilities and peoples lives depend on you. Thats why some of the responses are a bit rude, those of us that take it seriously have invested alot of time acquiring this knowledge, making sure our houses are up to the legal standards, we declare our profits for tax etc all which reduce our income from being a landlord - so I for one get pretty p'd when people come along and say its easy, nothing to it, the money just rolls in (not saying OP is one of these).
For the first few years you should use an Agent to find tenants, write contracts, do annual checks etc. Join NLA for training, legal helpline, landlolrd meetups, tax advice etc.
Apart from gas checks etc. one thing you MUST now do by law is register the deposit. MYDeposits is one org that will do this - their website has a lot of info.
If you don't do this within a certain period and give tenants the relevant paperwork, they can claim 3 months' rent. You don't actually have to pay the money in, but there is an official record of it.
It isn't rocket science but if you need to ask about insurance then you need to think long and hard about this. You will need to inform your lender, who may or may not give permission , charge a fee or change your mortgage package , and have landlord insurance for the building and any fixtures and fittings. I wouldn't look for tenants yourself, even if you just use an agent to do this aspect and an inventory . The deposit needs to be placed in a registered scheme, the tenants need ID to prove they are eligible for residency, references checked, legal tenancy agreement in place.
On a practical note there are fire retardant regulations for any soft furnishings including mattresses and sofas which must have the relevant label to prove it. I'd recommend leaving bare minimum as you will need to maintain it. Install smoke and CO alarms. Above all it is no longer your home , detach and you will feel it less personally when things get damaged or go missing. Take photos of the condition of carpets and decor although you can offset some maintenance and wear and tear costs. It is unlikely a tenant will treat it the same as you might so be realistic about needing to redecorate and replace carpets etc more regularly. You will need to register for a Self Assessment tax return to declare the income, even if you make little profit.
You also need to check whether you're in an area where landlords have to be licensed - some councils have introduced schemes.
And if you're in Scotland you cannot charge tenants any fees eg for inventory, referencing etc. These must all the borne by the LL but are tax-deductible, so should be considered in the financial aspects.
And don't forget Legionella assessment - a legal requirement.
I gave up self-managing just over a year ago, as it was becoming increasingly time-consuming to keep up with all the legislation. The deposit schemes have really taken self-managing up a level, probably one of the reasons why LL are moving to unfurnished lettings (as well as forthcoming tax changes).
One other thing I will say, is that many tenants actively target amateur LL, because they think they'll be a soft touch & inexperienced enough to miss the fundamentals eg date-stamped photos embedded in a signed inventory, no credit/reference checking, no ID checks. Also because agencies won't touch them (smokers, DSS, pets).
I used to get phone calls from people with CCJ's, who smoked & had pets (all of which my LL insurance forbids), thinking I would happily accept them as tenants. So please be aware of that. Some tenants can appear so "nice" on the surface but it's so incredibly difficult & expensive to remove them.
It's a huge relief for me to hand over to a decent agency- no more midnight phone calls saying the boiler isn't working, or only 2 out of 8 tradesmen showing up for quotes, having to take time off for deliveries/repairs, etc etc etc.Good riddance!
It's a huge relief for me to hand over to a decent agency
I could not possibly have managed my house without the agency. Things were fixed quickly whenever anything went wrong - e.g. water coming from the bathroom into the kitchen, a door handle breaking, a light switch not working - all sorted very quickly with no input from me and the agents tame workment would get the keys from the agents as well so no one had to be there to let them in (unless the tenants wanted to be).
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