Despite the pandemic and various tax and regulatory changes of recent years, being a landlord remains a very profitable form of investment when done right.
In times of crisis, as has been the case for the last year and a bit, bricks and mortar is often seen as a safe investment, being a tangible asset that brings in regular income.
Rental demand has remained high, even soared, during the last year as priorities have changed and people have been looking for different kinds of homes – typically with more space and gardens.
All this bodes well for someone letting out a home. But if you’re doing it for the first time, or you’ve become an accidental landlord during the pandemic, the lettings landscape can be quite scary, complex, multi-layered and confusing.
With this in mind, it helps to have an excellent knowledge and understanding of the market before you enter it.
Trade body ARLA Propertymark recently outlined its top tips for those landlords renting out property for the first time, to help people get to grips with the ever-increasing number of laws governing the private rented sector and ensure that nobody falls foul of landlord legislation.
Get your property tenant-ready
First, work out whether you want to let the home furnished, part-furnished or with no furnishings at all. Even if the home you’re letting is non-furnished, you will still be expected to provide basic white goods.
If you opt for the furnished approach – which could have appeal to younger tenants, in particular, who want a ready-to-move-into home – it’s a good idea to remove anything valuable or sentimental. This’ll not only prevent these items being damaged, it’ll also prevent tenants feeling awkward about renting a property that is filled with someone else’s very personal belongings.
It’s important to remember, too, that less is always more – clutter and over-the-top furniture won’t go down well – while all upholstered furnishings must comply with the fire and furnishings act.
Additionally, it’s advisable to think about the type of tenants you want to target. For example, if you’re hoping for a family who will stay put for a few years, they may have their own furniture already and won’t want your stuff. They’ll be keen to put their own stamp on the home. By contrast, university students are highly unlikely to have accumulated enough belongings to furnish a house and will be glad of a furnished home.
Lastly, there are legal implications to consider when it comes to letting property – is it in an area with licensing? Is it an HMO? Are you complying with the Tenant Fees Act 2019? Is the property freehold or leasehold?
It’s important to be aware of the rules and regulations in your local area – as well as things like council tax bands – before you allow tenants in.
Employ a safety-first approach
As a landlord, you have a legal and moral duty to keep your tenants safe. With this in mind, smoke alarms are required on all floors of your property and it is the landlord’s responsibility to ensure that carbon monoxide detectors are installed in any room where solid fuels are burnt (including wood, coal or biomass).
You must ensure these are tested and working correctly before the first day of the tenancy. Up-to-date gas safety and electrical certificates must also be in place as a priority, as copies of these must be provided to tenants along with a copy of the EPC. The rules around electrical safety have recently changed, to ensure that all electrical installations are inspected at least every five years by a competent person.
Establish whether you want to let with pets
A big topic of debate at the moment, with an increasing number of tenants seeking homes which allow pets. There are upsides and downsides to permitting pets in rental properties.
The vast majority of landlords don’t (only around 7% do, according to government estimates), because of worries over damage, mess, noise pollution and other issues. But the pandemic has seen a dramatic spike in pet ownership. Particularly among the younger generations who are more likely to rent. In addition, families who are making the PRS their home.
Allowing pets could make your home more desirable to a wider pool of tenants. Encouraging renters to rent for longer. But, it’s important to remember that even the best-behaved pets are likely to have an impact on a house.
Check if you need a landlord license
You must check if you need a landlord license from your local council before your property can legally be rented out.
In 2006, legislation was introduced to ensure landlords maintain their rental properties to a good standard. By working closely with a reputable, experienced letting agent, you’ll be able to tell if you need a license or not.
Make sure you protect renter deposits
Landlords who take a deposit from their tenants must protect it in one of the following deposit protection schemes. The Deposit Protection Service (DPS). MyDeposits or the Tenancy Deposit Scheme (TDS).
You will also need to protect the deposit within 30 days of receiving it. Providing the tenant with both the deposit protection certificate and completed ‘Prescribed Information’.
If you fail to do this, it could result in you not being able to evict your tenant. Plus the full return of the deposit and a fine of up to three times the value of the deposit.
Sort an EPC
As a landlord, it’s a requirement that you must serve your tenants with an Energy Performance Certificate (EPC), to give them an indication of how energy efficient your property is. Under rules introduced a few years ago, your property must be at least an E on the EPC band.
Arranging a new let without making sure your property is up to these standards, could result in a fine.
Conduct regular inspections
While this has been more difficult during Covid-19, any good landlord should carry out regular inspections of their property to ensure it’s being looked after well and to nip any potential maintenance problems in the bud.
It’s important to remember that you must not enter the property without the tenant’s permission. This is considered trespassing and is illegal.
Lockdown is easing, but you must strictly adhere to the Covid-19 safety measures. Even when carrying out any inspections by you or your agent. You must give tenants 24 or 48 hours written notice. This will be written down in your tenancy agreement with them.
Make sure your insurance is correct
As a first-time landlord, you might not give insurance too much consideration. But, you risk invalidating your policy if you do not inform your buildings insurer that you’re renting the property out.
Most standard buildings insurers don’t provide the protection you will need as a landlord. You should take out specialist landlord insurance. Look for policies which cover loss of rent, damage, legal expenses and liabilities. Again, your letting agent will be able to point you in the right direction.
Choose the right agent
Which leads us nicely onto this, one of the most important parts of any successful tenancy – choosing the right agent. Make sure that any agent you use has Client Money Protection. While being part of a respected redress scheme is another bonus. They should also be on all the major portals. Ensuring your home is advertised to the widest possible tenant audience.
To find out more about letting your home successfully as a first-time landlord, please get in touch with us at Harringtons Lettings. We aim to provide landlords and tenants with a comprehensive and efficient service.
We cover a wide area across Sussex, including Brighton, Hove, Portslade, Shoreham, Worthing, Lewes, Peacehaven, Seaford, Newhaven and Eastbourne. Also able to offer management across the whole of the UK, if required.
What’s more, we are members of The Property Redress Scheme and the Client Money Protection Scheme.