Becoming a reluctant landlord

[Bakingnovice]

Our house sale fell through last minute and as we have exchanged on our purchase we have had to let our house. I'm currently looking for landlords insurance and will then look for an agent.

The agents we have spoken to have said they take a monthly fee, plus a few hundred pounds to check any electrical items left, a few hundred to produce a schedule of condition, a few hundred for 3 monthly inspections, a few hundred for preparing the documentation. And all the costs start again if a new tenant is needed after 6 months.

We've been advised to leave it unfurnished as tenants prefer that. We weren't expecting the costs to be so high. All we want is for the mortgage to be covered and hopefully enough left from the rent to pay the agents fees and our tax bill on the income. Our agent has also mentioned that 8 out of 10 tenants do not maintain upkeep of the house. It's sad because this has always been our family home and we would love for a family to live in and enjoy it. But the rental market seems so fluid these days and there seem to be more bad tenants than good. I know there are also some hideous landlords too.

Could we prepare the schedule of condition ourselves and carry out the inspection ourselves? Just trying to save some pennies and try to understand the minefield that is letting. Any advice most welcome.

Don't use this agency. You can get an independent inventory clerk to draw up an inventory /schedule of condition - in an unfurnished house it shouldn't cost more than £150 for an average sized house. You can use your own contract (if you are confident about that) and, should you wish to find your own tenants, you can use independent companies for credit checks eyc.

Shop around for an agency - stipulate that you are looking for long-term tenants - preferably a family - so want a minimum of a year tenancy agreement. I let and manage my properties myself though as it isn't difficult assuming that you will be living nearby.

The one thing that your agency is right about is that the majority of tenants don't maintain a property but then that's not really their duty is it?

Good luck.

How hands on can you be , will you be local and able to deal with maintenance etc. I assume you mean an inventory which can be carried out by anyone but needs to be thorough in case of issues later. Rarely will you find yourself making profit from such lets and of interest rates rise or you have gaps between tenants you may well not even cover costs such as mortgage and Council tax. Agents can offer a finder service which is basically just getting tenants references , secure deposits or take a monthly cut for management. Get a few round , ask their advice on what should be retained, who your market is and how much it might rent for , what their schedule of fees includes and how they would manage the property if needs be.

What do you mean about maintain upkeep? We rent and keep the property clean and well-vented. But anything other than very small repairs, upgrades, no, we don't do these. They cost money we won't get back as the asset does not belong to us.

Edinburgh city council have a tenancy agreement on line for use...Ive been quoted £325 for Tennant finding service and they do inventory and all the legal stuff for that too..I am first time ll so sm going with this untill I have got to grips with everything, I am local to my house so can manage it myself..Ive got loads of work to do on house yet though like wired smoke alarms , new boiler big ouch! And apparently I may have to supply all the white goods too. Cant believe that no one makes any money on this as know a few ll who keep doing it! Best of luck but think you should try a few more agents as that one having a laugh!

Yes, shop around, or consider managing it yourself but perhaps paying for tenant finding, or just credit reference checks.

I've let property myself, without paying for help at all, for some years.

An advantage, apart from financial, is meeting prospective tenants and being able to go with your own assessment, or 'gut feeling' (the most reliable indicator of success / problems IME), if you feel confident about doing so and won't be self-defeatingly picky.

Knowing your market is essential. Who are they? What do they expect? How fussy can you afford to be? It's much easier letting in a popular area, where you can have your pick of tenants. Quite different where you may not have so much choice.

Look at what else is on offer in he area, quality, facilities, contract type and how long it stays on the market.

One year contracts are normal, you can choose to have a six-month get out clause, or not.

Take photos to go with your inventory. You would have to prove damage to the deposit-holding agency to withhold any pat of the deposit.

I'd always charge a deposit that is more than a month's rent, about 1.5x to avoid the possibility of non-payment in the final month. I'm always amazed when people don't do this. Tenants on benefits don't have cash for deposits though, that's a different game.

Oh yes, you can download tenancy agreements from university accommodation offices. Adapt as necessary but the legal essentials are all there. Sometimes far more detail than really necessary.

Will be v close to the property so could manage.

I don't expect tenants to maintain, that's the wrong word. Applogies if ive offended any tenants out there. But I've been told by lots of people that you're v lucky if you get a tenant who keeps a decent level of cleanliness and general tidiness. I suspect this may be because where we live there seem to be lots of short term renters. I suppose what I'm trying to say is that I'm still emotionally attached to the house and would hate to see it trashed. I must disassociate myself from it! When we rented many years ago we treated the place like our home but I can't expect everyone else to be like that.

Thanks for all this advice everyone. Lots to check up on aswell as getting the property all painted and cleaned for a new tenant.

no, you aren't lucky if you get a tenant who cleans up. Most people do and the deposit and inventory means you get compensation if they don't. Tidiness isn't your business, they will take all the scattered knickers with them when they leave. As mentioned, maintaining the place remains up to you BUT they should report problems.

if you are in the south expect about 15% of rent to be charged for all the services you list, plus a bit extra. Don't forget insurance for legal expenses and malicious damage.

take out and store everything to which you are attached.

I would shop around on an agent. For property in our locality we use a local agents finders service, for one months rent. They advertise, do the viewing, prepare all the paperwork, then we manage ourselves. The Gas and electrical safety certificates can be done by a local company. I think Gas Safe Certificate is around £60 a year.
We do the inventory check in and out ourselves and manage ourselves. If you are local, this is doable, and you will save a fortune, after all the agent is really just a middle man but is very useful for the properties we have in the north.
Also in our experience if you get a family they are more likely to stay and be more inclined to "care" for the property. Sharers and young professionals tend to move on after 12 months, and don't understand what "clean" means. Also have written in the agreement that carpets and cookers must be professionally cleaned at the end of the tenancy.
You can make this work, and remember any mortgage interest payments and costs incurred are tax deductable. But you are right you must detach yourselves from this property.

Wanting the house to be looked after and problems to be reported early, before they've escalated, is why I prefer to meet potential tenants myself. An agent will take anyone who ticks all their boxes. You don't have to and can make a basic character judgement. Communicativeness is key, I think.

When seeking former landlord references, go for the previous one, not current, if possible. A landlord keen to get rid of a problem tenant may not be completely open.

Could you not drop the price to still try & get a sale?