How to be a better landlord
According to the latest English Housing Survey, 20% of households now live in the private rented sector (PRS), which has doubled in size in the last 20 years. People are now renting for longer and there’s a growing demand for good quality accommodation that can be a real home, rather than a temporary roof over someone’s head.
In response, the lettings industry has undergone a huge number of changes over the past two decades, most since the Housing Act came into force in October 2006. There are now nearly 150 laws and regulations governing the PRS and changes are being introduced all the time to raise standards in the sector and make it safer and more secure for everyone involved.
That means, as a landlord, you’ve got a huge pool of prospective tenants and a potentially very good long-term investment. The important thing to appreciate is that, to be successful ongoing, you’ve got to operate at the top of the industry.
If you’re a new landlord, you might not be aware of just how much is involved in operating a buy-to-let property, so here are our top 10 tips for how to start as you mean to go on and be a better landlord:
1. Research your local area
For buy-to-let to work well, you’ve got to invest in the type of property that’s in demand today and likely to be in demand into the future. Speak to good local agents about where the shortages in demand lie, what tenant types are most likely to give you the rentals and returns you’re looking for, and what tenants expect to have in a property. Once you know what tenants are looking for, you can make sure you give them as much of their ‘wish list’ as possible.
2. Provide the best quality you can
Sometimes it’s tempting to cut corners and try to make savings when you’re preparing a property to rent, but you’ll only get the best tenants paying the best rents if you have a great property to offer. That means clean, modern finishes; attractive décor (forget magnolia – today’s tenants want antique white paint and decent carpets and curtains); good quality fittings that are stylish and hard-wearing; co-ordinated furnishings; well-functioning utilities (for example a high-pressure shower) and a high speed, reliable WiFi connection.
3. Know and understand your legal obligations
These days, keeping track of your legal responsibilities is almost a full-time job in itself. In addition to all the health and safety requirements, which include carrying out a risk assessment on any potential hazards and ensuring you obtain the necessary gas and electrical safety certification, you’ve got to:
• Comply with your particular local authority licensing rules
• Understand your obligations under the terms of the tenancy agreement
• Know when you can and can’t enter the property
• Understand the correct legal procedures for giving notice and evicting tenants
• Understand your obligations for carrying out maintenance and making necessary repairs
• Know about protecting your tenants’ deposits and the information you must legally provide them with…
…. that’s just for starters. And with more legislation in the pipeline – including recommendations that all landlords must sign up to an Ombudsman scheme – you’ve got to make sure you have a way of staying up to date with these legal changes.
4. Join a landlord association
National associations, such as the National Landlord’s Association (NLA) and the Residential Landlords Association (RLA), will keep you up to date with legislation and other industry news, help you understand best practice and provide legal advice. Not only are they very helpful to you on a practical level, it also gives your tenants confidence that you’re making every effort to be a professional landlord. If there is a local landlords association in your area, it’s a good idea to join that as well, as each local authority has its own particular planning, licensing and regulation policies in addition to the national laws.
5. Use a managing agent
You might think you’ll save money by letting and managing your property yourself, but that often turns out to be a false economy. There’s so much involved in referencing tenants, ensuring paperwork is correctly administered, knowing what health and safety checks need to be done and when, remaining legally compliant, handling maintenance requests properly, dealing with tenants if they’re having issues… And if you get any of that wrong, the penalties are potentially huge. For instance, if the local authority checked your property and discovered what they considered a serious health and safety violation, they could fine you up to £30,000 without even taking you to court. By using an agent who’s a member of ARLA, RICS, NALS or UKALA to let and manage your property, you can pass on some of the legal responsibility and have the peace of mind of knowing it’s in the hands of professionals.
6. Make sure you and your property are properly insured
It’s essential to consider which landlord insurance is right for you. Insuring a buy-to-let property is different to insuring your own home and you need a specialist policy that protects you against all the common property risks and also those that come with letting to tenants – such as malicious damage. Having the right insurance means both you and your tenants (if necessary) will be looked after if the property sustains damage.
7. Make sure you’re protected against problems with your agent
Before you engage a managing agent, check that they have both Professional Indemnity insurance and Client Money Protection, so you’re covered if they are negligent, go bust or misappropriate monies. Around 60% of agents are members of ARLA, so will have CMP, as will agents who are members of RICS, NALS or UKALA, however the rest may not, so be sure you have financial protection and that the agent operates to a code of practice.
8. Forge a good relationship with your tenant
Even if you use a managing agent, you can make it clear to your tenant that you’re a professional, fair and reasonable landlord. Be prepared to compromise on small things if it means attracting and/or keeping a good tenant – e.g. as more tenants are looking for longer-term tenancies, it may be worth letting them repaint some rooms, or to allow a well-behaved pet.
9. Don’t be greedy!
Don’t make the mistake of hanging out for the highest possible rent. It often makes sense to accept a little less if it means letting quickly, rather than having a property standing empty for weeks while you wait for an extra £10 or £15 a month. And when it comes to rent reviews, if you have a great tenant who looks after the property and always pays on time, if you can, always try to increase rent in line with costs i.e. inflation, however is it really worth increasing it anymore if you don’t need to?
10. Keep the property looking good
It’s easy to let a rental property get tired, but remember that every time you have a change of tenancy, it’s a new home for the next tenant. Landlords across the board are stepping up their game and you’ve got to keep your property looking fresh and attractive. So refresh paintwork and soft furnishings, and check fittings between tenancies to make sure everything’s in good order, investing in repairs and replacements as necessary. When you give a tenant a nice home and show you care, you generally find they look after it in return.
For further advice about becoming a landlord or for buy-to-let mortgage advice, please don't hesitate to get in touch with the team here at Mortgage Advice Bureau.
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