Renting out property in the UK can be a great way to help boost income either as an extra income stream or to replace your existing career. However, there are a number of important facts and considerations you need to know before choosing to become a landlord. In this article, we’ll cover some of the most essential things to know before delving into property development in the UK, from understanding the legal aspects of being a landlord to handling deposits and rents.
Knowing The Legal Requirements
Before you put your property on the rental market, familiarise yourself with the legal requirements. Firstly, ensure your property is safe and meets all health and safety regulations. This includes obtaining a Gas Safety Certificate annually, ensuring all electrical installations and appliances are safe every five years, and installing smoke alarms on every floor and carbon monoxide detectors in rooms with a coal fire or wood-burning stove. You can also get an EICR report from Trade Facilities Services to show your property is safe, abide by regulations, and increase the chance of tenants renting your property.
Preparing Your Property
Preparing your property for tenancy is crucial to attracting tenants and securing the best rental value. If the property appears worn out, consider redecorating. This doesn’t necessarily mean a complete overhaul, but a fresh coat of paint and ensuring that fixtures and fittings are in good working order can make a significant difference. Also, decide whether you will rent the property furnished or unfurnished. Remember that providing furniture can justify a higher rental price, but it comes with additional maintenance responsibilities.
Setting the Right Rent
Setting the right rent is pivotal in attracting tenants and achieving a good return on investment. Research the local rental market to understand the going rate for similar properties in the area. Set a competitive price that reflects the property’s location, size, and condition. Be realistic; overly high rents may deter potential tenants, leading to longer vacant periods.
Choosing Tenants
Selecting the right tenants is critical. Conduct thorough checks, including credit checks, employment verification, and references from previous landlords. These checks can help you assess whether potential tenants are reliable and financially stable. It’s also wise to meet potential tenants in person to gauge compatibility and their seriousness about maintaining the property.
Drafting a Tenancy Agreement
A well-drafted tenancy agreement is fundamental. This contract between you and your tenant(s) should outline all terms and conditions of the tenancy, such as rent amount, payment method, tenancy duration, and obligations of both parties. Ensure that the agreement complies with current UK housing laws to avoid legal issues down the line.
Managing Your Property
Decide early whether you will manage the property yourself or hire a property management company. Managing the property yourself can save you money but requires a significant time commitment and understanding of landlord responsibilities. A property management company can handle everything from finding tenants and collecting rent to managing repairs and legal compliance, which can be particularly beneficial if you own multiple properties or do not live near the property.
Handling Deposits and Rent
It’s essential to handle deposits correctly. In the UK, you must place your tenants’ deposits in a government-approved tenancy deposit scheme (TDP). This protects the money for the tenant and helps resolve any disputes over deductions at the end of the tenancy. Additionally, setting up a straightforward rent collection process is crucial. Consider setting up automatic bank transfers to ensure timely payments.
