Know the area.
Landlord Victoria Whitlock advises investors to buy in areas they know well, and to avoid ‘bargain’ properties which could seem too good to be true. “Don’t try to be clever and sniff out the next property hotspot, because you can come a cropper that way,” she says. “Stick to where you know.”
She speaks from personal experience, having snapped up a flat which, unbeknownst to her at the time, was only a stone’s throw from the local sewage works, meaning that particular area would never become desirable. Despite having shrewdly carried out all kinds of inspections on the flat itself, a little local research could have saved her an awful lot of bother.
If you are still interested in buying in an area you don’t personally know, it is worth visiting both during the day and at night to get a sense of how safe it is. You should also look into how much other landlords in that area are charging.
Prepare for all of the costs.
You will have accounted for a mortgage and the inevitable letting agent fees, but you may also want to buy building or landlord insurance, and of course there will be costs incurred for gas certification and annual checks before you can start making money as a landlord. It is crucial that you factor all of these expenses into your buy-to-let budget. You can save a small fortune by using Rentify instead of a traditional letting agent.
Find tradesmen you can trust.
You might think that you can carry out all of the work on the property by yourself to keep costs down, but it really does pay to hire a professional. When sourcing builders or plumbers, always remember to deal with established firms with trade association membership. You might also want to ask for references or recommendations, and always, always give a crystal clear specification of exactly what you want.
A new set of regulations introduced last month has put carbon monoxide awareness on the national radar, with compulsory sensors in all rental properties. Carbon monoxide alarms should be a priority for any landlord, along with smoke detectors and regular gas safety checks.
Be mindful of tax and the law.
Letting out properties is becoming an increasingly complex process due to ever-changing legislation and mounting tax regulations. It is incumbent on landlords to stay abreast of all of these changes, to avoid being hit by hefty fines. Earlier this month, an Islington landlord was fined £7,000 for failing to license a home in occupation of more than one household; avoid similar action by contacting your local council and finding out what is required of you.
Following the introduction of Chancellor George Osborne’s new budget, mortgage interest tax relief is also going down to the basic rate of 20 per cent, and the ‘wear and tear’ allowance is being scrapped entirely. So careful, detailed bookkeeping is a must.
Vet your tenants. Thoroughly.
It can be tempting to let your property to the first people who come knocking, to secure your rental revenue as quickly as possible after you’ve spent so much money. But a shrewd selection process can save you all kinds of trouble later down the line. Checking past references will help you determine whether you can expect your rent on time, and a sit-down chat will indicate how long they intend to stay, as well as letting them know what you will and won’t tolerate. You can get a free credit check with Rentify, or get a comprehensive referencing for just £49.99.
Also, as of this year, landlords are legally obligated to carry out mandatory immigration status checks, to confirm that their tenants have the right to live in the UK. Failure to comply with these screenings will result in a £3,000 fine, or a prison sentence in extreme cases. While this is currently only in place in the midlands, it is expected to be rolled out across the country by 2016.
Always keep an up-to-date inventory.
Should there be any dispute between you and your tenants regarding the state of the property, a full inventory is an all-important piece of evidence. While landlords are able to carry out an inventory themselves, it needs to be approved and signed by both parties before the tenants move in. In serious matters, an independent inventory might carry more weight.
Never let your property go empty.
This might seem like an obvious one, but your property is making you no money while it stands empty – and you still have to pay your mortgage and other fees regardless. Short-term tenancies favour the tenants, and will result in a greater number of void periods, so you might wish to favour families or couples who desire a long-term tenancy. Alternatively, if you are renting to students, then it is worth having a contingency plan for the vacant summer months, such as letting the property out to holidaymakers. And of course, a well-kept, properly maintained home will make tenants that much more likely to want to stay.
Communication, communication, communication.
While undoubtedly your tenants will be unlikely to invite you round for dinner, it is still important to determine a means of communication, should either side have concerns they need to express. A simple text, email or WhatsApp thread is an effective way to flag any urgent issues. Alternatively, you can hand over this responsibility to Rentify’s customer service team.
And finally – know your rights as a landlord.
While the law can fall on the side of the tenants in some situations, it is important that you know where you stand, should you ever need to take action or evict your tenants. The National Landlords Association and Citizens Advice Bureau are useful resources when it comes to solving tenant issues.
George Spencer is CEO at Rentify.