First time Landlord looking for advice

[millarkie]

My Mum can't manage her house anymore so she's moving in with us in a few weeks and wants to rent out her house furnished (rather than sell it - which would be sooooo much easier).
I've read a couple of books about renting out property but would appreciate any real life tips.
We know that the deposit has to be held in a special account and we need gas safety check etc. We are having all outstanding diy done, redecorating a lot, have cleared the garden down to grass and a few plants round the edges..
Mum has already found 2 families who are friends-of-friends who are looking for somewhere to rent so would like some advice on whether this is a good idea or whether she should definitely go through an agency so that financial checks etc are done.

I would think for your first experience, an agent is a good idea. Letting to friends of friends not always wise either, especially if they don't want to treat it as a commercial relationship.

We're first timers too and are very glad to have an agent even though they aren't foolproof (need lots of chasing).

Is it owned outright? If not you will need permission of the mortgage company and they may require you to use an agent.

She has permission from mortgage company but they didn't mention anything about having to use an agent - I'll get her to check with them though.
I need to check that she has looked into the insurance side too - I guess there's a few insurances that she'll need?

We did our first buy to let last year (we've now sold it for financial reasons) - I would recommend a commercial type letting. You need usual gas etc checks. YOu can get the agent to market the property and deal with the inventory and the various checks you need and then manage yourself. They will then draft the tenancy agreement and usually you'll find the first months rent is swallowed up with their fees for dealing with these bits and bobs (ours took 7% of the annual rent of the property). We did a 12 month let with a 6 month break. The tenant stayed for 10.

If you want to vet the tenant from a personal perspective then perhaps you could be there when tenants view even though the agent does the technical stuff afterwards . Our house was very popular and went on the first viewing - I wish I'd actually seen the tenants/seen more tenants. The agent will let to the first people who take it - if you agree to do it and I suppose I couldn't see why not. When I met the tenant when they first moved in, I really wasn't sure about them and altho they said they weren't smokers for eg I knew that they were. They weren't actually that much bother in the end - we managed ourselves.

I'd recommend gathering up a few handymen numbers (electrician plumbers etc) who you can call on last minute if you decide to go down this route as tenants aren't that patient when things go wrong (fair enough really) and you don't want to have to call on the "emergency" plumber/electrician etc as they are usually hugely expensive. Also depends whether you work/how far away you live - I'm part time and lived 2 mins drive away so really convenient but it wouldn't have been otherwise.

Hope that helps

PS - from my experience we had buy to let mortgage and no specifiation needed for managed or not and we had buildings insurance and tenant takes out their own contents (ours unfurnished) although you say that your mum will be letting furnished - speak to the insureres - they'll help you out with that one.

Thanks Woodforthetrees, I think I may have a small problem in that, because it's mum's 'home' that's being let, she has an emotional bond to it, more than she would have to a buy-to-let hence her wanting to 'know' the people who rent it - but your idea of having her/us there at viewings might help that - thanks

We are 40 mins away and dh is competent handyman - including most plumbing jobs, sister is 2 mins away and her dp is a builder..we need to find a friendly part-p qualified electrician though!

Remember that tenants have a right to privacy. You must give them notice if you want to come round. Technically, they can ask to have notice in writing, and 24 hours is usually the absolute minimum amount of notice. There is no way to get around this - if you try to re-write a tenancy agreement to let you waive this right, it's void.

(Just saying this because your mum might still feel 'it's my home, I want to be able to keep an eye').

You also need to change your building/contents insurance to a Landlords one, which is a little more expensive. I've just done this recently and the policy included some legal fee's cover too. You can also get a policy that covers you if your tenants don't pay the rent, it was about £90 per year. We didn't take this out, but it may be worth considering.

Get the house as up to scratch as you can and remember that it's a legal requirement to have smoke alarms that are wired into the electrics.

The other thing I did was copy all the manuals for appliances, you are responsible for maintaining and replacing them so you want to be sure the tenant knows how they should be operated.

The smoke alarm thing isn't in any of our rental guide books! I knew it was necessary for any houses being built to have them wired in but didn't know they needed to be retro-fitted to rentals. That'll mean holes in the ceilings. Eek!
LRD - will remind her that she can't pop round and expect to go in.

Sugartits - I've been searching but I can't find any reference to a legal requirement for wired-in smoke alarms for normal domestic rentals - only for Multi-Occupancy buildings (HMOs). Can you give me a link or an idea where to double-check this?

A smoke alarm isn't legally required, but you really do need one. Your local fire service may well come and fit it for free.

You have to have a gas safety certificate every year from what used to be Corgi. Also new legislation requires you to have an energy performance certificate, they are valid for ten years.

I agree with others; don't mix business and friendship. I would recommend approaching a local agent and ask for a fixed price for them finding, vetting and doing the contract. Your best bet is a 12 month assured shorthold tenancy with a six month break. Be clear if you are willing to accept Housing Benefit - pros and cons.

Are you planning on letting the property furnished? If so, do an inventory yourself as the agents make a killing here. Also, and how can I say this, most tenants now have high expectations of furnishings. I tend to replace with IKEA style furniture every three years (in London) and old sofas and beds don't usually go down too well. Also, don't overfurnish - four sets of cutlery, four plates, four bowls etc. is plenty otherwise it can get fiddly. Most tenants have some of their own things anyway.

mm as someone looking for private let , you need to think about are you wanting someone in for 12 months or someone looking for a home.

I have been very honest with agenst and made clear i am looking for a longterm let as can not face the hassle of moving every 12 months

As for Hb i know lot do not take it ,But what about doing on a case by case , and truthly a lot will be at least part funded by Hb and lol if your in the herts area i am looking

opps that be agents

Use an agent but don't use Foxtons.

Check the agent's contract for continuing payments even after the first year is up. Negotiate with them. Don't get tied into paying another fee if the tenants extend.

The agents will tell you what you need and set up the deposit scheme. Be aware that lease fees and inventory fees are ON TOP of the agent's fee.

Do not "promise" to tenants. Show the property AS IT IS. Meet them. Tell them if they are not happy with anything MENTION IT BEFORE SIGNING. Tell them they cannot assume that anything they see will be renovated unless they have mentioned it. If you agree to do it, do it: if you are not going to get it done then TELL THEM and make sure it's noted on the inventory. This is quite separate from all repairs that arise during the tenancy.

Take out an appliances insurance policy. Do NOT have it managed by agents -- they are UTTERLY UTTERLY CRAP at this and managing a property is NOT HARD.

Inform the mortgage holder and make appropriate adjustments.

Don't let furnished. They will be onto you for every spoon that goes missing.

Letting furnished is because she is moving in with us for 5 years (until her mortgage is paid off) and then ( depending on how frail she is) may move back. Her furniture is very nice (not Ikea but not antique) and some is very new ( I have told her it is likely to get damaged) so she wants to leave it in place and hope it's ok if/when she moves back.
Thanks for all the advice!
(not in herts by the way... Mid-Essex)

Is your Mum aware that she will probably be liable for tax? For property, that invariably means completing a self-assessment tax return every year and once you're on the system, you can't get off no matter how simple your financial affairs become.

Also, if she has a repayment mortgage like most people of her generation, she will only be able to claim back the interest part of the payment not the capital. Towards the end of a mortgage term, you are paying proportionately less interest and much more capital. Has she factored that in to her calculations? I would recommend ringing your local Inland Revenue office, I've always found them very helpful.

Has your Mum really thought all this through? It's a fairly unusual thing to choose to do and letting can be quite stressful. I've been doing it for over 10 years and still coming across things I never expected.

Income tax allowance is 9450 for over 65s. The maximum rent would come to 6500. On top of this she has a tiny pension. It is likely that she won't have a large tax burden. She ran her own business gor many years so is used to doing self assessment tax.
She does not have a repayment mortgage. She was (mis)sold an interest only mortgage which runs until she is 74! She has investments that should pay off the capital when it's due (we are talking very tiny amounts compared to modern house prices.) Both sister and myself have offered to clear her mortgage but she refuses to accept that.
She is currently working 2 minimum wage jobs to earn enough to cover her mortgage and bills for the house. She is depressed and knackered.
We have tried suggesting that she sells the house and buys something smaller outright but she refuses.
It may be unusual but she is a stubborn lady and we want her to be able to stop working, and it's the only acceptable solution to her.
My sister is going to try to accompany her into a rental agency this week..

One of the main differences between this and a 'buy to let' situation is, I guess, that it's not to make a profit on the rental. The difference between mortgage and rent is likely to be swallowed up maintenance and insurances and fees. But mum will not be working and will have no bills, rent, food to buy. Pension will be disposable income.
But still, any more tips about things we should do or watch out for are gladly welcome!!!

You obviously have thought it through! She should never have been sold that mortgage and she certainly shouldn't have to be working so hard at that age. You and your sister are doing a good thing.

My advice would still be to be clear on whether you accept housing benefit or not, I would still let unfurnished or part-furnished. Also buildings insurance, the tenants will need their own contents insurance. If there is outside space, be clear about who is going to maintain this.

Is there any definition of part furnished and fully furnished? If she supplies basic furniture and essential White goods only would that be ok? She lives in an town with a very high proportion of new immigrants (? Economic migrants? People moving European country to follow work) so is expecting that furnished would be popular as people won't be wanting to bring furniture or buy it for a few years.

Just a quick note on renting furnished, her furniture will be wrecked in 5 years. 90% of tenants will not look after furniture and "normal wear and tear" will be heavier. You might even find that it will not last 5 years no anything worth anything should be removed. We also get all carpets shampooed and cooker professionally cleaned before a tenant takes a property, then we have written into the agreement that this must be repeated (receipts provided) when they leave. Saves a lot of disputes.

Also second what others have said about agents, get them to market, do agreement, inventory and credit checks, then manage yourself from there, it's quite easy. We have 5 and my DP manages them easily.

Do not get into personal arrangments or sob stories, it will only end in heartache. I know from bitter experience.

Good luck.

Thanks HTWH. I agree about the furniture but she won't pay for storage and we don't have enough space for her to bring it with her (and tbh it's not my type of thing). I've talked to her but to her the next 5 years will take her to the age her mother was when she died so it's difficult for her to think about whether shell move back and miss the furniture or move into sheltered housing/a home and not have space for it anyway.
She has a lovely bedroom set which is only a year old but wants to leave it and use our furniture (which was bought with dd in mind so we'll end up needing more for dd now). Might try talking it over again, 6 weeks til she moves in. Eek

Second Heels on the furniture. Find a way round, even friends who need a few bits and will look after it "nicely". Bring the bedroom set!

Really, furnished is a right pain.

Just a note, did you never pursue the misselling? We pursued two misselling problems and got compensation.

probono's advice is good. Am a landlord of many properties and couldn't have put it better myself. Good luck!

She didn't persue the mis-selling, we spoke to her a few times and suggested it - but she didn't take it up with them (very typical behaviour for mum).
I will try to persuade her re: the furniture but I'm guessing she will use it as another argument in favor of renting to her friend's friends (her friend has been singing their praises especially about how much they will look after the property), and that I will get another lecture on how the most likely tenants will be new to the country and not have furniture..ho hum.
(Dreams of selling the place instead )