Renting out a property can offer a good return on investment, but there are a number of details you need to get right to protect your investment and make the process of being a landlord as simple and stress-free as possible.
The following are five things we believe every first time landlord should consider before investing in rental property.
What should a tenancy agreement include?
A tenancy agreement defines the relationship between you and the people renting your property, including both your and their responsibilities. Key details the tenancy agreement should cover are:
- How much the rent is and when it is due
- What deposit the tenants need to pay and how this will be held
- The tenants obligations e.g. to keep the property in good condition, pay bills and council tax, not to keep pets etc.
- Your obligations as landlord e.g. to keep the property in good repair, get appropriate insurance etc.
- What will happen at the end of the tenancy e.g. how much notice you and the tenant need to give each other.
What types of insurance do landlords need?
There are various types of insurance it is usually worth getting as a landlord. The main ones to consider are:
- Buildings insurance – Covering the cost of repair and replacement for the property itself e.g. after fire or flooding.
- Contents insurance – Even if the property is let unfurnished, it is still worth getting cover for items such as carpets, white good etc.
- Emergency home cover – Provides cover in case of an emergency such as a burst water pipe or gas leak that requires immediate repair.
- Liability insurance – This covers you if a tenant or anyone else is injured in the property. It is often a requirement for student or social housing.
- Loss of rent insurance – Protects you if tenants fail to pay their rent or the property cannot be rented for an extended period. Worth considering if you are buying the property with a mortgage you would struggle to cover without the rental income on the property.
- Legal expenses insurance – Can cover the cost of legal action, for example if tenants need to be evicted.
Is it worth managing a rental property yourself?
Using a letting agent to find tenants and manage the property can be appealing as it theoretically means that you can just sit back, let them do all the hard work and collect the rental income from the property.
However, it is worth bearing in mind that letting agents will usually charge up to 15% of the rental income to manage a property, which can seriously cut into your returns.
If you are only planning on buying one or two properties, for example as a retirement investment, it may be worth managing the property yourself. Although this does mean you will be solely responsible for resolving any issues with your tenants.
What are a landlord’s legal responsibilities?
As a landlord, one of your key legal responsibilities is to ensure that the property is safe to occupy. Three of the key issues to be aware of are gas, fire and electrical safety. You will need to supply smoke alarms, make sure furniture and fittings are fire safe, make sure all electrical systems and appliances you supply are safe and have all gas appliances installed and maintained by a Gas Safe registered engineer, including annual gas safety checks.
Your exact legal responsibilities will depend on the type of property you are renting, for example a house in multiple occupancy (HMO) will have different requirements to a one-bedroom flat. It is strongly recommended to consult with an experienced property solicitor before becoming a landlord to ensure you understand all of your legal responsibility.
What to do if tenants don’t pay their rent
Obviously the whole point of becoming a landlord is to collect rent, so if your tenants fail to pay on time, this needs to be addressed quickly.
In the first instance, it is a good idea to give your tenants a polite call as it may simply be a mistake that can be quickly fixed and becoming too aggressive straightaway can damage your relationship with your tenants. It is a good idea to follow up such a phone call with an email, however, providing a written record if this becomes a recurring issue.
If your tenants repeatedly fail to pay their rent and/or refuse to discuss the issue with you, you may need to consider legal action to recover the rent and evict them. There is a strict legal process you must follow to evict a tenant to avoid accusations of illegally evicting or harassing them. Before taking action you should discuss your situation with an experienced property lawyer and ideally get them to handle the process for you.
Get expert legal advice for renting out your first property
Bird & Co Solicitors is a long-established law firm providing legal services and advice for landlords across England and Wales from our 3 offices in the East Midlands.
With many years of experience dealing with the full range of landlord and tenant issues, we can make the process of becoming a first time landlord as simple and straightforward as possible.
Our team can help you with everything from buying a property to rent out and creating tenancy agreements to dealing with problem tenants and more, helping to protect you and your investment.
To find out more about our services for landlords, call us today on 01476 591711 or use our contact page to find details of your nearest office.