Becoming a landlord for the first time can be a very enticing option as it provides the benefits of additional income as well as a start in a new profession. Whilst it can be a time consuming job, being a landlord has several benefits such as tax reductions and an investment in long term security. These benefits, however, can only be enjoyed if all of the correct processes and procedures have been followed on the way to welcoming your first tenants with several important legal reuquirements to adhere to. Here are the seven key steps that need to be taken before you can successfully become a landlord.
- Do the research
Research is a crucial first step to becoming a landlord. To be sure that your property is going to be desirable for prospective tenants it’s important do find out everything you can about the local area including what transport links and schools are nearby as well as looking into other similar properties for rent. If you find properties available similar to yours that have been available for a long period of time this can raise a red flag as it may suggest that the interest just isn’t there. Equally this could present you with an opportunity to find a niche. Finally, it is very beneficial to narrow down what type of tenant you’re looking to attract (for example students or professionals) as this will guide much of your decision making from deciding rents to fixtures, fittings and décor.
- Get The Right Mortgage
To legally operate as a landlord you will need to ensure you have the correct type of mortgage for your property. A buy to let mortgage will take your rental income into account as well as your general income, but a larger deposit will be required as the risk for the lender is considerably higher. It is often a requirement of buy to let mortgages to have the correct type of insurance for a rental property. If you are letting out a property you already own you will still need to inform your mortgage lender of your intention to let as this may require a change of mortgage.
- Take Safety Seriously
When becoming a landlord it is important to understand your responsibility to ensure your property is safe and habitable. Failure to have the electric and gas equipment checked and certified as well as inspections and maintenance carried out on doors and windows in your property puts the health and safety of your tenants at serious risk. It is also a legal requirement to provide smoke alarms on each floor of your property as well as fire extinguishers for HMO properties.
- Check Tenants Have The Right to Rent
Once you’ve begun to look for tenants to fill your property it is a requirement to make sure they are able to legally rent a residential property. To make this check you can request a residence permit or birth certificate with a council tax bill. It is expected that these will be the original documents and it is always recommended that you keep copies for your records.
- Protecting Tenant Deposits
Placing your tenants’ deposits in a tenancy deposit protection (TDP) scheme within 30 days of receiving them is a legal requirement. This not only protects you as a landlord from potential damages or disputes but also protects the tenants as deposits put into the scheme must be returned to them within 10 days of settling on the amount to be returned.
- Inventory Is Important
Once you’ve successfully had everything in the property checked and certified and have found the perfect tenants, you will need to ensure you provide a comprehensive inventory as this will make it clear exactly how your property should be left once the tenant’s rental period with you is over. Be sure to meticulously catalogue the exact contents of your property, taking notes and photos of the condition of items for your reference.
- Tenancy Agreements
One of the most important documents to get right when becoming a landlord is the tenancy agreement. The agreement will establish the rules that both landlord and tenants need to follow as well as outlining the amount of rent and date it must be paid by. To protect both parties from any future disputes it’s vital to choose the right type of agreement for you.
Becoming a landlord is a complex process that ultimately can prove to be hugely rewarding. It’s a fantastic achievement to successfully let out your first property, however, your duty as a landlord doesn’t stop there. Once your initial tenants have come to the end of their rental agreement you will be faced with returning deposits and evaluating the property or drawing up new arrangements if your tenants wish to stay on.
Here are David Charles Property Consultants, we possess a huge amount of experience in providing landlords and tenants with consultancy services. Our knowledgeable team can advise on lease renewals, rent reviews and, when something hasn’t gone quite right, can alleviate stress and help negotiate to achieve dispute resolution. Our team are always happy to discuss your property management needs and look to offer a personal and supportive service.