It always amazed me when I worked for a lettings agent, how little research some people had done before deciding to become a landlord. Admittedly for many the decision to rent out their home was a quick one (offers of jobs abroad, relationship breakdown and unable to sell so renting out the property instead etc) but for many there was an assumption it was just a case of sticking a “To Let” board outside your house and then collecting the rent every month. Let me tell you, it is far from that simple, and can actually become incredibly complicated if you don’t do a bit of due diligence from the outset. So here then are the five things you should think about before becoming a landlord.
Speak to your mortgage and insurance companies
The very first thing you should do, is speak to your mortgage company, and check that you are permitted to let out the property. There are very strict rules around this and if a mortgage company finds out you are renting out a property without their knowledge the repercussions can be costly. Ditto your buildings insurance company, they need to know that it is not you living in the property.
Use a reputable agent
It is very easy to think you can put an ad in the local paper, or that you can rent to a friend of a friend but I would always be very very cautious about doing that. When things are good, that is great, but if things go wrong, it can be an absolute nightmare. By using a reputable agent to market and manage your property you allow them to alleviate alot of the stresses that come with letting out your property. They will also ensure that should you need to move back into the property the relevant Notices are served in a timely manner to allow you retake possession of the property.
Consider having the agent fully manage the property
Many agents will offer different levels of management. Some will do a “tenant find” service where that is all they do, some will just collect the rent on your behalf, and others will “fully manage” it. This means that they will carry out regular inspections to ensure the tenants are looking after the property, and will be the first point of call should the tenants need to have something repaired during their tenancy. This is especially helpful if you are overseas and don’t want the hassle of trying to find a plumber on a Friday afternoon when you are battling a time difference. There will obviously be different levels of fees for each service but it is a sound investment to have it fully managed in my opinion.
Take our Landlord’s Insurance
As I said above, when things are going well, it is great but when things go wrong, it can get very stressful and costly very quickly. I would also suggest that a landlord compare landlord insurance policies and take out insurance. Alot of my job at the letting agent was helping landlords regain possession of their property when the tenant had stopped paying the rent. In the worst case scenarios the landlords had to gain possession through the courts, and by instructing bailiffs, all of which can take several months (in some cases up to a year), all with no rent being paid. If the landlords had taken out rent protection insurance for instance, these costs would have all been covered. In the case of a major flood or fire some policies may even pay for alternative accommodation (always check policy wording to ensure you have the level of cover you require).
Have a running repairs fund
I have lost track of the number of times a landlord said “well it worked when I lived there” when I called them to tell them a shower had stopped working, or a washing machine had given up the ghost. Forgetting they had said appliance for fifteen years and that actually it was now at the end of its life span. Things do go wrong in rented properties and as a landlord there is a legal obligation to fix anything that “forms part of the tenancy”. So if there was a dishwasher in the property at the start of the tenancy, when it goes wrong or breaks down, it must be repaired or replaced. Even if it belonged to the previous tenant and was left there as a gesture of goodwill. It always wise to have money set aside so that works can be done in a timely manner. This fund may also be needed to pay the bills if the property is empty between tenancies too.
Renting out your property and becoming a landlord can be a great way to make some extra money, and to allow you to move quickly if you are relocating, but it is well worth doing your homework beforehand!
If you have any questions, do get in touch and I will be happy to help.
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