If you have a property and want to harness more than just its appreciating value on the housing market, then one area where you can benefit is letting. Most beginners and quite a few hardened landlords do this by going to a reputable agent who can handle all the different legal and administrative aspects including contracts, insurance, and on-going maintenance.
The other option is to do the work yourself and let your house out privately. The benefits of this are that you don’t have to pay a third party, such as a letting agent, fees and you can keep more of the profits yourself. The downside is that you have to handle everything from finding tenants to carrying out maintenance, which is fine if you have the time and energy.
Contacting your Mortgage Provider
Before you begin: If you are still paying the mortgage on your property then you will need to make sure with your mortgage provider that it is permissible to rent out your home. You may need to change to a buy to let mortgage and this could involve higher rates and additional costs. If you are starting from scratch and buying a property specifically to rent out then you will need a deposit of between 15% and 25% depending on the lender and you may find it all but impossible if you are a first time buyer.
Preparing the House for Rental
Whether you are looking to rent your property privately or go through a letting agent, you will need to make sure that your house or flat is in the right condition to let. This could involve a little makeover such as laying down new carpets and painting the walls or more substantial renovations. In addition, you must have valid Energy Performance Certificates and Gas Safety Certificates before renting.
Whilst self-furnishing properties are acceptable, most renters will expect the basic amenities such as a cooker and fridge. Even though rental properties are at a premium and in high demand, particularly in certain areas, such as inner cities, you will need to make the house or flat appealing if you want to attract the right prospective tenants.
The biggest problem for private letters is that they have to find suitable tenants and this can be a time consuming process. A large part of letting agent initial fees go on finding tenants, though there is a misconception that they provide the kind of vetting service and experience that a novice landlord might find difficult to duplicate. Whilst this may true in some cases, with a little attention to detail you can make sure that you cover all the bases.
Nowadays, things are made much easier with the online world because you can use online agents to cheaply access online letting platforms such as Zoopla and Rightmove. Letting agents use these as a matter of course anyway to drum up interest in a property. These online solutions also provide you with the right tools to check out the market and sort out the level of rent you are going to ask for the property, as well as how others present their own information.
If you are letting privately then you are going to need to interview tenants, show them round the property and get references and other personal details. Carrying out a background check is not easy if you don’t have the experience and you might want to consider employing the services of a referencing agency before you get out the contract, most online agents provide referencing services, generally paid for by the tenant.
Sorting Out the Contract
Having the right contract in place for your tenants could well save you a lot of heartbreak later. Whilst there may well be examples you can copy online, it is always best to employ the services of a competent solicitor to make sure everything is legally correct and protects you and the tenant. It will cost you a bit extra but will save you a great deal of money if any disputes arise.
Once you have your tenants installed you will have to provide an on-going maintenance service that could include anything from mending leaks to roof repairs. If you have prepared the property well in the first instance, this should be kept down to a minimum for at least the first year but it’s a good idea to get to know some reliable plumbers and electricians you can call on in the event of an emergency.
Maintenance will need to be carried out in a timely manner and you must ensure that areas such as gas and electrical systems all meet the required safety standards.
Paying Tax and Insurance
Whether you are going through a letting agent or renting out your property privately, you will need to pay tax on the profits and inform HMRC of the additional income. There is plenty of advice on paying your tax as well as the service you provide to your tenants on their website.
You will also have to get landlords insurance that covers you for a variety of situations. With the rise in the number of rental properties over the last few years, the landlord insurance market has become quite competitive and you can get some excellent deals if you shop around.
Whilst your tenants may well be the best-behaved people on the planet, it’s not always the case that things run smoothly. If you have the right contract in place and maintain regular contact with the tenants, as well as employing the services of a capable solicitor, you should be able to negate any problem areas more efficiently. Monitoring tenants is not just about making sure they are behaving themselves but also ensuring that they don’t have any problems.
Private Vs. Agency Letting
There’s no doubt that if you find the right letting agent it takes a lot of the heat out of renting your property and allows you to get on with other things whilst earning an income from a home or flat. Private letting can take up more time than you think but it can save you on agency fees and leave more money in your pocket if you do it properly. For most, it comes down to a question of preference and whether you want to leave the day-to-day running of your property to a third party.