To consider renting a flat directly, not via a letting agency

[AquaFaba]

Having refurbed the flat I bought many years ago as a single bod during lockdown, I'm now looking to rent it out.
It looks great - new windows, new kitchen and bathroom and tonnes of storage. (I wish it had looked like that while I lived there!)

We had a letting agent view it before works were completed and they say it could let for 425-450 per week on a FURNISHED basis.

Bear in mind letting agent fees would be 10% plus VAT for lettings.

Since then, a friend of the building project mgr has approached us to ask about renting it from us directly on an unfurnished basis at 1600 pcm.

Initial thought on this was ok - I'd rather have a stable tenant in there for a while, than trying to squeeze the small stuff, ideally for a period of 2 years - and it would also mean I didn't have to purchase furniture for the flat.

However, she is now coming back asking for a break clause at 1 year.
I am worried that this is going to be the start of potential issues - or am I overthinking?

I'm not sure.
Am not an experienced landlord: would appreciate some constructive advice.

Thank you

That sounds fine to me. Anything to save those iniquitous agency fees! We rent privately (to people we have known for years). A 12 month break clause hardly sounds annoying? You can get a standard letting agreement online for only a few £, and just have a look for a deposit scheme to hold their deposit. It's super easy. Just be sure to do it properly with the lease and deposit. Just because you're doing it privately doesn't mean you don't do it RIGHT.

Break clause at 12 months sounds fine. Otherwise you'd be asking her to pay rent for two years regardless of if she needs to move due to employment/family/whatever which is more restrictive than having a mortgage!

If you've the time do it yourself the overheads are high, if the tenancy goes wrong the letting agents won't help anyway.
I definitely do it myself to hand pick the tenants.

And make sure you get references etc.

Definitely do it properly though as a pp said - identity, residency, referencing and financial checks on tenant, deposit, government guide to renting to tenant, deposit scheme details to tenant, inventory with photos to tenant to be signed and returned, gas cert and safety check, details to tenant, agree a schedule of inspections to monitor for minor repairs, find reliable tradespeople for repairs and maintenance etc.

Oh yes and smoke and carbon monoxide detectors, regular checks also (again, find someone for this).

As a tenant, I would always choose to rent from a good agency rather than a private landlord.
The agency I currently rent from is large, has a good reputation (I know many don't from the tenants point of view) and they have processes in place which means any problems get sorted quickly.

It’s normal to have a 12 month break clause if it’s not a 12 month tenancy agreement. They have probably spoken to someone who has told them that and come back to you.
I rented privately from someone I knew and it was great. We had a proper tenancy and both benefited from bit having to deal with the agents. Plenty of stuff online about landlord responsibilities and tenancy agreements you can use.

I think it's better than using an agent. Puts you more in control.

You can sign up with Open Rent and they'll handle the tenancy agreement etc for about £50, so that you know it's done properly.

If you're going to use a letting agency then please choose a good one. I'm renting via one at the moment, I can't get through to them, the landlord can't get through to them. I've had a pipe leaking for over a month now and nothing is happening because they're so shit. I tried going over their head direct to the landlord and received a bollocking for that today.

You do realise that the tenant can move in and pay nothing more, and in normal times it is six months to evict? Currently there is an eviction ban and it's 18 months and growing. Get any of the paperwork wrong and you may never be able to evict.

Go lurk on landlordzone to see what can go wrong. Then get fully informed as to rights and responsibilities. And cost up full insurance.

Most agents are expensive & shit, so it's better to do it yourself if you're the sort of person who is thorough.

Ive been on both sides; I don’t think a break clause is unreasonable and often people ask for it at 6 months as you never know what might happen. My main concern would be what happens if they don’t pay the rent? With the letting agents we’ve used part of their fees include rent guarantee/insurance so that if the tenant stops paying the rent then we would still get the rent through the agency. I think you can get that separate insurance though yourself.

A one year break clause is quite reasonable, both for your benefit and for theirs. @SomewhereUpMyArse had some good advice up-thread - there are a lot of things to consider being a landlord.

While MN would often have you believe it is a lot of money for doing nothing there are a lot of legal responsibilities that come with it. I would suggest becoming a member of a landlords association - it will be a small price to pay for getting some good advice and usually access to a legal helpline if you need it in the future. They often run landlord training which will go over the basics.

Key things to consider are getting good references for your new tenant, think about having a guarantor, make sure you protect the deposit correctly and issue the correct paperwork. Make sure you have a gas safe certificate and an Electrical Installation certificate. Issue all the correct paperwork including the How to Rent Booklet and the EPC - all legal requirements now. Make sure your tenancy agreement covers everything you need it to. Have numbers for reliable workmen in your phone (plumbers, heating engineers, electricians, general maintenance). Think about who will manage any call outs if you are on holiday etc... Put a pot of money aside for repairs, maintenance, regular certifications etc... Make sure you have the requisite smoke/heat/carbon monoxide detectors, plus certification they work if required. Check what the local licencing requirements are - some areas now require all rental property, whatever the size, to be licenced. Make sure you have a fire risk assessment in place and that the tenants are aware of the action to take in event of a fire. You will also need a Legionella risk assessment. Those are the obvious things that spring to mind but I've probably missed some.

Don't be fooled into thinking that if you are letting to someone known to you you can afford to skip some of the due diligence - that way madness lies. Lastly, remember that at the current time it can take a minimum of a year to remove a non-paying tenant, so be sure that you are going to be able to cover at least that length of time of expenses without any rental income coming in, just in case!

Sorry, realise that all sounded very negative! There's no reason at all you can't do a better job than a letting agent but just make sure you do your homework first so you protect yourself as best you can against any problems. Good luck!

Only other thing I would add is be careful granting a lease longer than 12 months - you may be giving additional rights. 6 months break clause with 2 months notice (so really no earlier than 8 months) is fairly standard. Some referencing companies give eviction guarantees of the prospective tenants if they pass their referencing - I would recommend doing this. Also, don’t forget in England there are limits to amount of deposit you have take (typically max 5 weeks) and you must register the deposit.

Agree with @bigdecisionstomake and would add that if you are organised and thorough there is no reason not to do it yourself. There isn't any special skill involved and agents don't study or have qualifications in order to do what they do : most of what is required is administration. But it's administration with strict rules and potentially costly outcomes for you if you don't follow them.

Letting agents charge for every little thing and they especially charge a lot to landlords now that they can't charge tenants for initial checks and so on. Given that I'd question if their charges are worth it.

But. Be realistic. Are you the kind of person who is good with paperwork and good at making decisions eg in regard to repairs, expenses, arrears etc. If you find any of that stressful or difficult, you might want to pay an agent to do it.

That's no guarantee that it will be done well of course, it's just that you personally won't have to devote time and energy to it.