Renting my flat out for the first time - what do I need to know?

[leamington66]

I am about to rent out my apartment and have never done this before. I will use an agent but what do I need to know before I do this? Its completely new to me and there must be pitfalls I need to avoid?

You need landlords insurance. I would also recommend looking at one of the better online forums for advice about the many many pitfalls that lie ahead and about which your agent may neither warn you nor know about.

And put on your hard hat because on MN, landlords are hated.

I am a very reluctant landlord but thank you. I will go investigate Landlord insurance

facebook group....' buy to let'...lots of good info and help....yes get the rent ins...about 150 to 200 a year....covers loss of rent and eviction costs if needed....all your gas and elec certs etc....do yourself...agency will charge 3 times the going rate....meet tenants yourself and choose....agency will shove in anyone to get their deal and comission etc....haggle over fees...got ours done from 12 to 6 % this week.....

First and foremost if it’s a flat speak to the freeholder, if they say no it’s a non starter.
then speak to mortgage company and insurance. Then speak to agent, if you’re a novice go down the fully managed route.

Assuming your mortgage company allow it:
Landlord insurance for non-payment of rent, damage etc - but also, what won't the insurance cover? If your tenants disappear with a year's unpaid rent, having ripped out your kitchen, broken the bath, pissed on every carpet, punched a hole in every door, wall and ceiling, how will you pay for the repairs? Can you afford to deal with this?

Do you want to manage it yourself or use a letting agent to field day to day issues and emergencies? What % will they take from the rent for this? What do their tenancy agreements look like - break clauses etc - are they onerous for you or your tenant?

How often will you want inspections carried out to ensure it's not going to be trashed / turned into a cannabis farm / housing 14 people it's been sublet to? Who will do them?

Have you got all the certification? Gas, Electric certs, EPC rating etc. Plan for the annual checks and ensure you know how much notice you have to give your tenants to carry them out.

See if your council area have a Responsible Landlord-type scheme: www.cornwall.gov.uk/housing/private-housing/cornwall-responsible-landlord-scheme/

Deposit schemes - ensure you have one you'll use to protect your tenant's deposit.

Meter readings - ensure you do them before you move anyone in and again when they leave. It's the tenant's issue, but you can save a lot of hassle this way!

A full and complete inventory is the best way to protect you and the tenant from disputes later down the line.

Be realistic about what wear and tear looks like - worn carpets, marks on paintwork, chips in paintwork, scuff marks on kitchen worktops might be considered reasonable, especially if a tenant has been in there for years rather than a week. You will have to budget for replacement of carpets, repainting of the house etc and your tenant cannot be expected to pay for it all - it's natural wear and tear and to be entirely expected to happen in the course of living. Damage is different.

Thank you. That is really helpful. I hadn't thought about certificates at all.

I think I am good about wear and tear - I figure carpets will all need replacing and probably the furniture if the tennant wants that left.
I am leaving the country so this will need to be by an agent but they want 14%

Where in the country are you op?

Everything said above. Be aware that your mortgage company will most likely require you to move off a residential mortgage to a BTL one, which may be more expensive.

I work in an industry where people get posted abroad alot, and it's common that people take another option, I.e. don't bother at all. This doesn't help the housing crisis, but I often hear that by the time all the fees are deducted, you are taxed at your marginal rate on the rest, its not worth the grief. Add to that the possibility of the place getting trashed or rent not paid.

You do need to consider if this is going to be worth doing for you.
You need an ecp, an electric certificate, gas( if you have it), talk to your mortgage company, insurance.

You have to understand that getting back into your house can be difficult once you let it out, the legal rights tilt heavily towards tenants.
If your house is trashed you will have almost no recourse.

We did rent our house out twice while overseas and it was okay for us. It wasn't always for friends.

Bare in mind you can negotiate agent percentages OP.

We paid 12% for full management service.
They organized everything, including certificates, deposit schemes, the legal information paperwork tenants need at the start of a tenancy, contracts, breakdowns.

It can be cheaper to gift tenants white goods in the house, then they are responsible for them if they go wrong.

Any furniture left needs the right safety certificates.

If you have a normal mortgage and have lived in the property as your usual residential property then it would be unusual for them to make you change to a BTL mortgage - they just need to be informed. Some won’t charge, some charge a one off fee - for us, Nationwide added 1% to the interest rate. Also they won’t let you change the mortgage whilst it’s being rented.

Register for a self assessment if not already for tax.

EPC can be a killer; our rented flat is in a listed building and isn’t allowed double glazing and secondary glazing wasn’t sufficient to get it to the required banding. We had to get an exemption.

The management percentage seems on the high side to me. If you’re shopping around, some of them include things like guaranteed rent for the first 12 months which we liked.

Get freeholders permission, make sure your tenants are fully vetted, understand that you will get wear and tear to your flat, get insurance, look at what your full legal responsibilities are as a landlord as even with am agent doing full management the buck still stops with you as the legal landlord.

Get your mortgage changed to a buy to let mortgage, most landlords have an interest only mortgage. Register as a landlord, you need to renew this every 3 years where I live. Get yourself set up for self assessment for tax purposes if not already. Make sure you understand how to do your tax return and what expenses you can deduct. Take photos of everything before the tenants move in. Gas safety certificates. Landlord insurance. Let the council know as you may get a reduction in rates depending where you live.

Agent percentage seems high, have you shopped around/ negotiated? I think I pay around 7%

• Landlord insurance
• Gas safety certificate
• EPC
• Freeholder’s permission
• Mortgage company’s permission/BTL mortgage
• Register for self assessment to pay the tax on any rental income you receive
• Will you self manage or use a management company?
• Consider if you’d be able to cope financially if your tenant stopped paying rent and you had to go through the long and painful process of evicting them

Look at tenants' references and the reason they left the last property carefully. Work out their wage to rent ratio. In two properties, over 18 years, we had two good sets of tenants and seven sets of shocking ones. Last one lied through their teeth on the application, refused us access to fix urgent work as they had a bloody big dog ( I relented the no pets clause for them) and left a hole punched in the wall. It took six months to get them out. This is in a nice neighbourhood too.

If you are leaving the country, especially if it’s somewhere with significantly different timezones I’d really really recommend a fully managed let even if it’s more than you want to spend

It will have to be fully managed as I will be across the pond.
It isn't mortgaged and is likely a corporate rent but I do appreciate the advice.

Interesting about the safety certificates for what I am leaving. Agent wants it to be up to the tennant if they want any/all furniture left. I figure they need the outside furniture at least but will see.

It is anything that is upholstered that needs the manufactures safety label still on it from memory.
Sofas, I think beds?
Anyway our agent said it was much easier to let unfurnished as a result of this.

You also need pact (sp) testing for any electronic items but that is quite simple.

The hardest thing might be to understand that your house isn't your home anymore it is someone else's home and your business asset.

Don't use an agent is my advice. Use Open Rent and then YOU get to meet prospective tenants and choose who you have. Agents don't give a flying fuck.

Get a good electrician and plumber who you can rely on if you have any problems, build a relationship with them.

Don't waste money on an agent!

OP is leaving the country. They can’t manage the property from abroad.

Negotiate on managed agents rates..

I found an agent invaluable when across the pond.
You are on a totally different time zone for a start and can't see anything for yourself.
Also an agent will keep up to date with changes in legislation.
They dealt automatically with anything below a certain cost threshold and I was consulted on anything above that.