Step-By-Step: How To Go About Lettings As A First-Time Landlord
Are you thinking of renting out your property in 2022? The UK residential rental industry is a minefield and, as a first-time landlord, it can be hard to know where and how to start. In this article, we’ll take you through exactly what you need to do and what you must consider to enjoy a smooth start to your landlord journey.
Start With The Basics
You will need to decide some basic things first. For example:
- When will the property be available to let? If you are still living in the property, when are you moving out? Make sure you leave enough time to do any necessary work to the property to make it fit for renting out.
- Are you renting it as furnished, part-furnished or unfurnished?
- What service are you looking for? Tenant-finding only? Paperwork only? With management?
- What is your plan for the property? Long-term let, short-term let (<6 months), sabbatical leave, selling soon?
- Do you need an appraisal? Note down all the property’s positive features so an agent can take them into consideration before you meet. e.g., period conversion, double-glazed windows, outdoor space, concierge, parking condition, lift, etc.
Find An Agent
It’s vital you and your agent get along. You will be handing over the keys to (probably) your most valuable asset, so it’s worth your while to research agencies both online and offline. Get recommendations from friends and family and online, such as social media groups dedicated to your neighbourhood as well as a forum like Nextdoor. Ask questions such as:
- What specific things did you like/dislike about your agent?
- How long have you been with them?
- Do you trust them? If so, why?
- What property portals do the agents have access to and how would they strategise marketing for your property specifically?
We recommend you meet with at least 2 or 3 agents so you can compare them, but note that the person you meet may not be your main contact throughout the management period.
Compliance and Consumer Protection Legislation
You will need to consider the questions below because your agent may not ask them.
- If you are a leaseholder – Do you have permission from your freeholder to rent out your property?
- If you have a mortgage – Do you have the lender’s permission? You will need to convert the property into a ‘Buy to Let’ mortgage. Have you held your mortgage for less than 6 months? You will be unlikely to be granted permission.
- Fire safety issues – Is the property safe in regards to cladding/insulation/fire alarms/balcony works, according to the latest safety requirements? Are any internal works expected soon? If yes, how disruptive would this be? Many tenants work from home, and although disclosing works is not a legal requirement, under the Consumer Protection Legislation, tenants need to be given all the information that may influence their decision to rent from you.
- Property licence – Do you need one? Most London properties do.
Renting out your property may not be as lucrative as you might think. Careful budgeting is essential, and you will need to consider the following:
- If the property is mortgaged – A ‘Buy To Let’ mortgage is more expensive. Speak with your mortgage advisor or lender for advice.
- Interest rates – Rates are rumoured to rise rapidly in the new year. Have you stress-tested your ability to keep up with repayments?
- Income tax – You will be responsible for paying income tax on your rental earnings. Whether you do this yourself or give it to a professional to manage is a cost you must factor into your budget.
- Safety checks – Landlords must renew compliance paperwork annually and periodically, e.g., gas safety, electric safety and energy performance certificates.
- Emergency fund – We recommend setting aside at least one-third of all rent for any emergency maintenance issues. Boilers can break down, leak remediation can be expensive, a neighbour’s issues can become your expensive problem, etc. Once you’ve set aside an emergency fund and the paying agent fee, does renting out still make financial sense?
- Wear and tear – Properties suffer from wear and tear over time and, unfortunately, sometimes suddenly and without warning. Redecoration and replacement of furnishings and appliances must be budgeted for depending on the age of existing ones.
- Rent guarantee insurance – Many landlords choose to have this type of insurance to protect their income.
There are probably many other questions not listed above that will be specific to your property. Ask your agent as many questions as you can. How they answer your questions should help you work out whether the agent is a ‘good fit’ with you.
Planning to rent out your property in 2022? Call us on 020 3588 5115 to discuss your requirements.
Disclaimer: Marybow Property takes all reasonable care to ensure that the information contained on this website is accurate. However, we cannot guarantee its accuracy or completeness of content. Our website, including the blogs, are not legal or financial advice and should not be construed as such. We reserve the right to change the information on this website at any time.