Tips / checklists for becoming a landlord

[NoPlanYet]

After months of uncertainty and buyers pulling out we've finally decided we're renting our flat out, withdrawing equity etc to fund onwards purchase.

We'll prob just do this for a couple of years then sell, but may end up keeping it longer term.

We have tenants lined up - our next door neighbours who are lovely, responsible, trustworthy people.

My question is what are the million and one things we need to do/know about being a landlord. Specific questions include:

Do we need to get landlords insurance?

Do we need any paperwork beyond gas and electricity safety certificates?

Is there a deposit protection scheme which is better than the rest for individuals who own one property to rent? And if our tenants pay us the deposit a bit late (they've asked if we mind waiting until they get their current place deposit back, we don't ) is it a problem if we only pay the deposit in say 2 weeks after they move in?

I read you can reduce your tax liability by including council tax and water plus utilities in the rent, then they're tax deductible expenses. I'd like to do this then split the saving with our tenants. For council tax and water it is easy, we're both (only just) 40% tax payers so I'd add 80% of the bill cost onto the rent and charge that each month - we effectively share the 40% saving. For gas/electric this is harder. I don't want to pre-guess their usage then be on their backs about them using more heating than we estimated so could we pay the bills each month and separately charge them 80% of the total, or is this over the line in terms of breaking rules? Their bills are high so a 20% saving for them would be really good and worth trying to make.

There are various minor bits of painting they'd like to do, they have a decorator friend (who I know - he's very trustworthy too) who they'd pay to do this. Is it worth waiting until they move in and then I pay for the work and they pay me back 60% of the cost because again it's tax deductible? Would I need to wait until they move in to do it this way?

Ditto dishwasher- it's ok but I'd rather replace it for them as I don't want them cursing the one cycle in 5 it doesn't wash properly. Should I wait until they move in to do this as it'll be tax deductible? DP can pop round and do the install...

I really don't want to be too close to any legal lines here, but given they're our good friends and we trust them fully I'm happy to do whatever we can to reduce costs for all of us within the law.

I will be getting a tenancy agreement signed with them, is it an assured shorthand I need?

Any advice gratefully received though please no advice about not mixing friendship with landlord business, we're fully aware of the risks and are happy to take them as we'd trust these people with our lives

[StealthPolarBear]

Ok poor choice of wording. I suppose the problem is I don't know what I don't know. I'd like a list of "have you considered. ..?"
I can then go and read up on the details but I won't know to do it unless I happen to stumble across a mention of it, or someome mentions it to me during the process.

[StealthPolarBear]

Bump for any other suggestions

[bialystockandbloom]

specialsubject you don't always necessarily need LL insurance. I'm a LL and have existing buildings/contents insurance which covers everything other than loss of rent ( fwiw, in 8 years I've never had this, though it's in central London so easy to let). The property is freehold though, so the insurance is the main freeholder policy - perhaps that's why.

But anyway just pointing out its not always the case that an existing policy doesn't cover you. Just need to check with your insurer.

[HelenF35]

Landlord zone is a good website. Lots of knowledgable people in the forums.

[specialsubject]

ok, perhaps there are flexible policies. But every home insurance policy I have EVER had for where I live asks who lives there.

never lived in a flat and not in London, though.

[StealthPolarBear]

Thank you for the suggestions

[bialystockandbloom]

OP also to add, wrt deposit scheme - make sure you use govt approved scheme. There are generally two types -those that insure the deposit for you but don't keep it (so you need to insure you have the amount to refund at the end of the tenancy), and the type that insures and also keeps the funds on your behalf (a safer bet if you worry you may not have funds to refund at short notice if eg they end tenancy earlier than planned).

[bialystockandbloom]

special I'm sure that's the case, particularly for contents insurance. And as I said, with me it may be because the (buildings) insurance policy is for the freehold company, rather than my individual property.

[Qwebec]

Be carful, I know quite a few LL's nd none would accept to rent to friends. The risk of things turning sour are too high. It's fine is you choose to do it, but keep in mind this is a buisiness transaction and protect yourself in the same way you would if you did not know the tenants. I know someone who had the same tenant for 25y. He always payed on time, was friendly and clean, the perfect tenant. After a messy divorce, he lost custody of his DD and it spiraled from there. He lost his job, started drinking, being theree for so long the LL left him some slack. After 3 months with our rent being paid she went to visit. To make a long story short, he starved himself to death. The flat was totally trashed, drains blocked and all. Costed 25 000$ to repair. This is unlikely to happen to you, but it's just to say that you never know what can happen to people (MH issues, loss) and your relasionship with them.

Silly things can ruin a friendship. I would be v wary of renting to friend. If I did it I would make the agreement as simple as possible to minimise risks of friction. So no we save you save, no splitting of bills. I would also agree in advance the % of rent increase, what happens if the rent is not payed on time and all that.